I went to an auction last week and it was very busy. Interesting. We’ve just gone into the double dip of the recession, Spain is about to be bailed out by the IMF and EU and I think we’re about to see the break up of the eurozone, beginning of course with Greece after their next election. So why are there so many hungry buyers around? They were not just developers – there were some owner occupiers about too.
I was after three lots. A small three bed house in Walthamstow guided at £195,000. I was prepared to go to £215,000 max but it went for £243,500. I didn’t even get into the bidding. It needed £30,000 of works and was worth £270,000 when refurbished so I didn’t see the point in buying it at that price.
Then there was a house arranged as two flats with – unusually for an auction – existing planning permission. I was prepared to go to £230,000 and it just breached my limit at £237,000. There was still some money to be made at that price, but I just didn’t like it enough, it had some possible problems
Then a really nice house in Upper Leytonstone guided at £220,000 went for £357,000. It needed about £40,000 to £50,000 of works and would be worth £440,000 refurbished, so again little or no money to be made at that price – I think it might have gone to an owner occupier.
I sensed pent up desire to buy. Maybe buyers are getting frustrated with the lack of good purchases around. The auction proposition is far less attractive to me when people are willing to bid into the stratosphere like this. Is this a spring bounce? Pre-Olympics hype? The auction market often trends ahead of the broader retail market so maybe London prices are on the up this year. According to the Land Registry they were up 5.1% in April. Most forecasters seem to expect a modest increase or a flat market in 2012. Will we see a post Olympics lull? How will Spain’s travails and the break up of the euro affect the UK housing market?