Auction sales nosedive

The rate of successful sales for properties offered at auction in the UK fell to its lowest level for three years during the final quarter of 2007, according to new statistics from the Royal Institution of Chartered Surveyors (Rics).

The organisation attributes the fall to tighter lending conditions – following the American subprime crisis and Northern Rock debacle – and greater uncertainty with regard to the future of the UK property market.

According to the findings some 57 per cent of properties offered achieved a successful sale during the final three months of last year.

This is compared to a figure of 69 per cent for the same period of 2006.

In total the number of completed sales fell nine per cent – down to just 4,539 completed sales.

Rics also finds 3310 properties were left unsold following auctions during October – December 2007 – representing a 50 per cent increase on the same period in 2006.

"Fears over further house price falls have taken some stimulus out of achieved sales at the auction house as specialist lending has all but evaporated," said Rics economist, Oliver Gilmartin.

"While lots offered at auction have stabilised, we expect a tougher year for many at the margins in 2008 as mortgage providers become more selective."

In further evidence of a slowdown in the sector, Rics finds the number of properties offered for sale at auction was also down to 7,849.

However, the composition of the properties available at auction has adjusted slightly.

The number of residential properties offered for sale increased 15 per cent, while the number of repossessed homes going under the hammer saw a 20 per cent increase.

According to Rics, the change demonstrates homeowners have struggled to service their mortgages following last year's interest rate hikes and tougher refinancing conditions.

There are also concerns the trend could accelerate in 2008 – with Rics expecting the number of repossessions to increase 50 per cent on the levels recorded for 2007.

"While tightening credit conditions will be most acute for those with a poorer credit history, less generous loan amounts and the introduction of some upper limits on loan advances could equally hit the mid-tier of the market, increasing the number of properties languishing on auction property books," concluded Mr Gilmartin.