Times are tough for the property market, but agility and long-term planning can turn adversity to profit, says Auction House UK.
It’s been a year of anticipation and unpredictability, culminating with the UK General Election, the Autumn Budget statement and the US presidential election. Uncertainty has subsequently been the theme for much of 2024.
However, stability and greater predictability look to play a greater part in the year to come with the cost of buying on the decline and activity levels on the rise. Auction will therefore provide an excellent platform for stakeholders to engage with the market efficiently and harness the advantages of the changing market environment.
How 2024 sowed the seeds of a tricky new year
With the change in UK government, the Labour party showed welcome signs of stability, introducing a pragmatic policy agenda and a mandate underpinned by growth ambitions.
The summer saw a declining rate of inflation, triggering a base rate reduction to 5% in August and signs that further reductions were to follow. Lenders responded positively with a drop in borrowing rates and activity levels increased as confidence grew in the market.
However, in early autumn the approaching Budget was heralded with rumours about tax rises and rental reform. As a result, the clouds of uncertainty once again began to gather.
Following its formal announcement, the UK entered a new fiscal environment with economic consequence. Taxes were raised, with changes to Capital Gains Tax and Stamp Duty; significant spending measures were introduced; changes in Environmental Performance Certificate (EPC) requirements for rental stock were announced; and the Renters Reform Bill continued its march through the corridors of Westminster. Despite a further reduction of 0.25% to the base rate, these tax and spending measures increased the rate of inflation through November. This has stifled activity levels in the mainstream market and delayed further base rate cuts.
Reasons for optimism in 2025
While these factors have certainly created clouds on 2025’s horizon, it must be remembered that inflation remains at a historically ‘normal’ level. Financial institutions are also in good health and there are indications that while base rate cuts may not be imminent, they will still be implemented (albeit over a longer period of time).
With this in mind, Auction House UK believes there is still reason for optimism, and room to support the sector’s growth.
Indeed, market commentators are still forecasting 4% growth in property prices through 2025, and 5.5% through 2026 (Savills). Likewise, rents are expected to increase regionally, asides from London.
“The Labour party presents stability in government, which the markets will be reassured by, and there remains liquidity in the lending market,” said Oliver Prior, National Commercial Director of Auction House UK. “The chronic undersupply of housing will keep property values from falling drastically, and there remains a supply and demand imbalance, which will keep rental rates from falling. This will provide opportunity for investors.”
Fast sales and long-term views
As always with the property industry, those with a longer term view will realise greater advantage in their property investments in 2025.
“We have seen smaller property investors selling out of overly leveraged portfolios as viability is stretched to breaking point, but appetite among larger landlords with more headroom and a longer term view on the market remains strong,” explained Oliver. As a result, these larger investors have been able to capitalise on an uptick in investment property coming to the market.
“We must also remember that the Stamp Duty changes will not come into effect until March 2025,” Oliver added. “This will make for a busy first quarter of the year.”
The auction industry responds well to changing market conditions, delivering agility and efficiency in transacting, which thrives in a time-short environment. Both investors and owner-occupiers wanting a quick sale will continue to turn to the auction sector, as will those who want to secure a property before Stamp Duty changes come into force.
The strength of the auction industry in turbulent times has certainly been borne out over the last year.
Auction House catalogues across the country have grown significantly over the past 12 months and the business’ average success rate has maintained itself, which testifies to a continued appetite in the property market.
Activity levels also continue to climb, and Auction House is anticipating the same growth trajectory into 2025. “The impact of government policy will be felt differently and at different rates across the regions of the country, meaning that leveraging the local knowledge of our auction teams is more important than ever,” commented Oliver. “The market is, and will continue to be, very price sensitive, meaning that getting the pricing right in the first instance is key to a successful and swift sale.”
Find out if auction is the right fit for you
To discover if an auction could be the right route to sell your property or land, visit the Auction House website to book a free, no-obligation valuation.
Alternatively, take a look at the company’s upcoming auctions to see what properties are on offer.
