BidX1: The UK Auction Market: Buoyant Despite Wider Economic Backdrop
By Simon Bailey, Director of BidX1.
Despite stalling towards the end of 2022 following the Truss administration’s mini-budget, the UK auction market saw a strong start to 2023. Unfortunately, the fallout from this episode was soon felt in the form of a sudden and sharp rise in inflation, along with rising interest rates, and the result was a quieter Q2 for auctions as buyers and sellers alike prepared themselves for potentially tougher times ahead.
The reality is that any negative change in the wider economy brings price corrections as buyers exercise caution and debt becomes less accessible. 2023 was no different, but the effect on sentiment was perhaps exacerbated by the inevitable belief that these economic changes would lead to a significant increase in distressed assets. In fact, although we did see a steady increase in such assets coming to the market, the volume was not as high as many had foreseen – and therefore the impact on pricing going into Q3 was not as severe as predicted.
Despite the volatility of the wider market throughout 2023, the auction market remained resilient. Motivated sellers were prepared to react to shifts in pricing sentiment in order to achieve positive outcomes. This was in turn met by pent-up buyer demand which created strong competitive tension across all asset classes. At BidX1, we saw auction sales increase by 34% on the previous year, from £116 million to £150 million.
Bidder activity also increased significantly, particularly during the latter half of the year, with the number of active bidders increasing by 23% and the number of bids placed through our platform increasing by 37%.
So, what is the outlook for 2024?
Interest rates have now been static for three consecutive months and, whilst it may be a few more months before they begin to fall, we should see a little more stability and confidence in the market. Of course, there is also the small matter of a potential General Election this year which could inject a further dose of uncertainty. However, at this point, we foresee the demand for well-priced property continuing in the short-medium term.
Last year, we saw unspent capital on the lots offered across BidX1’s auctions amounting to over £154 million. Such high levels of liquidity highlight the demand for correctly-priced stock across all asset classes and bodes well for those sellers prepared to react to market conditions.
Good advice and flexibility remain key in any disposal strategy and BidX1’s digital platform enables us to offer bespoke solutions to our clients which are worlds away from the more rigid structure of the pre-digital auction world.
BidX1’s next auction is taking place on 22nd February and the lots already confirmed include a mixed-use investment on Fulham Palace Road in London that has been in the same family ownership for almost 100 years. Producing £213,090 per annum and offering both asset management and income enhancement opportunities, the asset is guiding £3,950,000.
152-156 Fulham Palace Road, London
Also on offer is a retail and residential ground rent investment in the seaside resort of Bexhill-on-Sea, part let to Card Factory and producing £30,225 per annum. The guide price is £250,000 – £275,000.
50 Devonshire Road, Bexhill
The full catalogue goes live on 1st February. We will be accepting entries right up this date and can provide free appraisals on anything being considered for auction. Full details can be found by clicking here.
You can see all available commercial property from BidX1 on NovaLoca here.
