Merseyside’s property auction houses are seeing an increase in buyers. Tony McDonough reports

SIGNS of economic recovery both locally and nationally are still hard to come by, but the Merseyside property auction market seems to be on the up.

In the last few weeks, the biggest local operator – Sutton Kersh – has raised £3.1m from one of its regular events at the Marriott Hotel, in Liverpool city centre.

More than 70% of the 57 lots on offer were sold and it was Kersh’s best result since October, 2009.

Latest figures from the Essential Information Group (EIG), the leading UK authority on property auctions, reveals small signs of national improvement over the last quarter.

EIG managing director David Sandeman said: “Overall volumes of lots offered and lots sold in June was down when compared to June, 2009.

“However, the quarterly figures show signs of improvement, while the year- on-year comparisons reveal an increase in the sale rate and the total raised from auctions.

“Despite seeing reductions in the volume of residential lots being offered and sold, the quarterly and yearly comparisons show only very slight falls in amounts raised indicating that average lot values have increased.

“Figures for the commercial market continue to improve, with lots offered increasing by over 8% when compared to June, 2009, and receipts totalling more than £30m, a 23% rise.

“A strengthening commercial market is further apparent when analysing the yearly figures, with total receipts up 25% in the last 12 months when compared to the previous year.”

According to Sutton Kersh, auctions was one of the last areas of the property sector to be affected by the credit crunch and subsequent recession as repossession properties flooded on to the market.

Investors, especially those with cash, initially identified this as an opportunity to buy cheap stock but, as the crash worsened, and access to finance became more difficult, sales eventually started to fall off.

Now, 18 months on from some of the toughest conditions the market has ever seen, investors are returning, according to Kersh director, James Kersh.

He said: “The banking crisis has created the worst market conditions I have ever experienced but I can now say, with a big sigh of relief, that we do appear to be in a more stable period and we are even seeing a recovery in prices for some properties.

“Vacant residential properties, in particular terraced houses in north Liverpool, are proving to be particularly popular with investors.

“These properties generally carry low guide prices, between £35,000 and £50,000, and are easily let – especially at the moment while renting is the only option for many people who are unable to finance the high deposits needed to buy a property.”

At Sutton Kersh’s July auction, a two-storey retail premises, located in Allerton, in south Liverpool, attracted many bidders. The property produces a rental income of £40,000 per year. It carried a guide price of £350,000 and eventually sold for £454,000.

Kersh added: “One of the positives about the current economic environment is that it throws up some very good, rare investment opportunities that normally wouldn’t be available. Investors with finance that are willing to take a risk in the current climate will reap the benefits long term.”

Chris Johnson, managing partner of Smith & Sons, in Wirral, says buying and selling at auction has become demystified in recent years and has become increasingly popular.

He added: “Having held successful property auctions now for over 100 years, and in particular in the last 10 years with our re-launched auction department, this method of sale is proving to be more and more popular with both sellers and purchasers.

“As a result, Smith and Sons is holding more regular auctions and has established a regular following at its Wirral-based sales.

“Despite some gloomy press reports, the numbers attending these sales remains strong, possibly due to the free coffee and biscuits, and the buzz created in the room.

“And with more than 70% of lots regularly sold, often at prices well in excess of the reserve, vendors can see the attraction of the auction route.

“Its transparency, defined timescales for completion and competitive bidding following extensive target marketing create a feeling of excitement in the room for the vendor, purchasers and the auctioneer.

“Our connection with Auction House, the fourth-largest group of property auctioneers in the country, enables us to provide not only just local expertise but also national coverage.

“This, linked to their extensive database, allows us to reach potential vendors and purchasers throughout the UK.

“Not all properties are suitable for auction. A traditional modernised house in the middle to upper price ranges is still generally sold through private treaty. However, despite the widespread downturn in the residential market over the last three years, recent auctions have seen higher demand than expected for houses in need of repair and modernisation, and competitive bidding has produced great results for vendors.

“Investors, builders and those many people who have decided that bricks and mortar remain a good investment opportunity are encouraged by the continued low interest bank rates, confirmed again this month to remain at 0.5 %.

“This, together with high tenant demand, creates good interest in these types of property when they come to the auction sale.”

Kate Hughes, founder of Merseyside Property Auctions, agrees with Kersh that there are definite signs of a pick-up in the market.

She said: “We also had a really good last auction which contained quite a few receivership properties.

“There was one partly-built development opportunity with a guide price of £25,000 to £50,000 that ended up going for £85,000.

“I think buyers are getting access to finance, but sometimes they are struggling to complete the deals on time, which is why some try to strike a deal prior to the auction.”

And it is not just the local auction houses that are doing well in Merseyside.

Last week, LDP Business reported that Leeds-based Eddisons had sold a number of Liverpool properties at its latest North West sale.

The firm has a reciprocal agreement with Sutton Kersh, but just before its July auction some receivership properties were among the lots.

Eddisons’ Andrew Brown said this week: “Buyers are quite price-sensitive at the moment. Properties will be ignored if the price is too high. We are seeing more people in the room than a year ago, but it is still down from the peak.”