Sharp increase in auction sales

There has been a sharp increase in the number of properties being offered for sale at auction in England, according to new data.

New figures from EI Group illustrate the upturn, showing the number of properties on offer has soared by almost 300 per cent over the last three years.

Some 3,102 homes were offered at auction in the first half of 2008, compared to just 799 in the first half of 2005.

"Repossessions now make up over 20 per cent of the properties on sale at auction," said David Sandeman, managing director of EI Group.

"Banks and lenders offering repossessed properties are often keen to secure a sale on the day and are less worried about achieving a high price.

"As a result these properties are selling extremely well compared to other lots, with investors bagging some excellent deals. New build flats are also selling at huge discounts."

Distressed sales – properties vulnerable to repossession – have the potential to dramatically undermine house prices, with buyers accepting prices well below market value.

The EI Group data also reveal properties in London and its home counties are the most favoured for investors buying at auction.

Properties in these regions – which include the counties of Hertfordshire, Buckinghamshire and Berkshire - are the most popular, with 69 per cent of the properties sold on the day in May.

"Investors are benefiting hugely from the fall in house prices and the market is very much price led with properties with a low reserve selling well, particularly in traditionally popular areas such as Hertfordshire, Buckinghamshire and Berkshire," said Mr Sandeman.

"Conversely, buyers are rejecting properties that are not reasonably priced or that are flooding the market, causing Northern city centre properties in particular to go unsold."

Chris O'Toole