17th March 2020
Our auction event on the 19th March has been cancelled for obvious reasons. The auctions, however, are still showing signs they are on. This is very good, especially if you’re a buyer and can sneeze well in the room before your lot comes up.
An insider has told me that many lots will be run online, as many auctioneers have an online function. Online auctions have not taken off as much as perhaps they should have, given the age we live in. Property auctions are still very much a physical activity. Often, you will see the same characters in every auction.
About six months ago we were offered a very good site in Willesden. The site was being traded and was purchased extremely cheaply in an online auction. The main reason why the buyer managed to get such a good deal was because the property was bought online.
This presents an opportunity. The price of anything comes down to only two things: supply and demand. If the demand decreases, prices will drop.
We have had direct experience of this on the wrong side of the fence. A few years ago, we had exchanged on a couple of freehold blocks, both in strong locations, one in Shepherd’s Bush, the other in Harlesden. The completion was in six months’ time, so enough time to trade on the contracts.
Auction seemed the obvious choice. The properties were duly put in, with the anticipation of a strong resell.
One sold only after the auction, and the other did not sell at all; not for the reserve we had placed.
The reason was bad timing. This was due to a few factors, including two events which were going on simultaneously. One was the Olympics and the other was the Queen’s Jubilee. The masses were preoccupied. The auction room was sparsely occupied in sharp contrast to previous times. I even remember one occasion where the auction room doors had to close due to over occupancy. I assume due to fire and safety regulations.
Perhaps it was a blessing in disguise. The property that didn’t sell was a freehold block, consisting of three flats. Our client completed on the deal, benefitting from multiple dwelling relief on the stamp duty, which wasn’t too painful, and therefore the expenses for completion were not too high.
The flats were sold on piecemeal. Even then I missed a trick, the person who purchased the top floor flat was an agent. He asked for permission to build into the loft as well, which he paid a premium for. I bumped into him many months later only to discover he had made a tidy profit with the deal. A combination of adding value through development and the local market rising.
On one hand the market is starting to shoot up with all the pent-up demand being manifested, on the other we have a blip which is having an impact. However, it is important to note that although the Coronavirus (COVID-19) is having an economic impact the cause is not economic.
Overall, the wind is in the sales of the property market. It’s always good to look at this in perspective. London property is a 500 year old market. It is strong, robust and has survived many onslaughts in terms of regulations and taxations. I’m sure it will adapt and thrive through this episode.