Auction house market booming

Auction house market booming due to sluggish conveyancing process

The latest research from digital property pack provider, Moverly, reveals that the size of the UK property auction house market hit the highest point in a decade in 2022, approaching half a billion pounds in revenue.

Moverly has analysed the annual revenue of the property auction house sector since 2013 to understand how the market has grown over the last decade.

The data shows that in 2022, the UK property auction house sector generated total revenue of £409.3 million.

This is the largest in a decade and represents growth of almost 30% since 2013 when revenue totaled £316.4 million.

Despite this 10-year growth, the decade’s data shows that the property auction sector was struggling to gain traction for a long time, shrinking in size every year between 2017 and 2021 when revenue hit a low of £251.3 million.

When the pandemic hit, it initially acted to exacerbate this market decline with unusually high buyer demand meaning that sellers were less likely to turn to the auction house because selling on the open market was reliable and more profitable. This caused two consecutive years of double-digit decline in 2020 and 2021.

But this high demand soon started to cause a backlog in the housing market, particularly in the conveyancing process for which timelines began stretching beyond six months.

This goes a long way to explaining why the property auction house sector went from year after year of decline to recording remarkable annual growth of 62.9% between 2021 and 2022, as sellers who couldn’t afford to wait for the sluggish conveyancing process opted for the faster option of putting their home under the hammer.

From this extraordinary peak, the economic turmoil of 2023 has now led to a cooling housing market in which both buyers and sellers are sitting on the fence, waiting for the economy to stabilise.

As such, Moverly is forecasting that by the end of this year, auction market revenue will have recorded a marginal annual decline of -5.3%. However, this will result in annual revenue of £387.7m which is still the second highest in the last decade.

Moverly co-founder Ed Molyneux, commented:

“A severe bottleneck in the buying process, caused by surging buyer demand during the pandemic, forced many sellers to the auction house in 2022. This is far from an ideal path to selling as it often means accepting a lower price than would be expected on the open market, not to mention the uncertainty over just what that price will be.

The bottleneck was almost entirely caused by delays in the conveyancing process which simply couldn’t handle the demand.

It’s clear that Home Information Packs (HIPs) would have been a massive help in reducing this backlog. By providing sellers with up front information about the property, they don’t need to go searching for that information themselves, which means they don’t have to wait for an available surveyor, for example, which expedites the conveyancing and prevents many sellers from resorting to an auction sale.”