In 2016 the residential auction property market slowed down and it’s thought that this could continue in 2017.
According to Carmen Reichman, writing in the website Specialist Lending Solutions, 11% fewer properties were put up for sale in auctions in November 2016 compared to November 2015.
Many landlords buy property at auction, but it’s thought that many have been put off by the increase in stamp duty to 3%.
The tax relief on mortgage interest payments has been reduced in 2017 and this could further deter landlords from expanding their portfolios. Commercial mortgage applications are now subject to tighter rules. These extra costs may have also caused landlords to think carefully before purchasing additional properties at auction.
Reichman points out that about 80% of properties purchased at auctions are bought using cash, and that these buyers will probably continue to purchase.
Another factor that could affect the auction market is the slowing pace of house price rises. House prices rose by an average of 7.2% in 2016, but property finance experts predict that the rate of house price rises will slow down in 2017 to between 1% and 4%. Some of those purchasing residential property at auction intend sell the property at a profit within a short period of time, and rely on house prices continuing to rise.
There has been am increase in first time homebuyers in 2016 and if this trend continues in 2017, then many first time buyers will attend auctions hoping to purchase a house at a below market value price.