2012...A Year of Opportunity! - 06/02/12
Chris Baguley, Director at specialist lender Auction Finance Limited says 2012 will be a year of opportunity for property professionals in the auction rooms...
Last year auction rooms escaped the doom and gloom of the property market and presented investors with amazing opportunities to acquire good quality stock at significantly reduced prices. In 2011 we lent more than £17m to buyers in 216 transactions, a 34 per cent increase on 2010. We've been lending on purchases of all sizes and our loans have varied from £25,000 to more than £1m, averaging at £74,500.
This year will create even more opportunities and we'll see more people coming to us for funding. In fact, we're predicting we'll lend in excess of £25m to property professionals at the auctions.
The popularity of repossessed stock is a growth area we've identified. Sharp investors are making handsome returns by being adept at buying these 'repo' properties. After all, lenders are keen to sell the property at the best achievable price which can often be as much as 60 per cent less than the mortgagor originally paid.
Add to this the fact that the less experienced investors have left the market due to tougher access to finance and it's a perfect platform for the experienced property investor to excel.
As well as the usual one-off property purchases by professionals we predict there will be more sales of multiple stocks. For example, the number of new-build property schemes (houses and apartments) that are at various stages of completion entering the auction market are likely to increase. This is where seasoned professionals will make large margins if they select the right schemes in the right locations. Ex-public sector owned property will also fall into this category as the budget deficit kicks in. Multiple sales of ex-Ministry of Defence homes may occur which can be ideal for investors targeting first-time buyers or key sector workers such as nurses.
Our clients, who are based the length and breadth of the UK, will remain proactive in 2012 and say the market will still be moving for them as they re-invest their 2011 returns.
Cash rich clients will spread their money across a number of investments by utilising auction finance. The deals have been too good to miss but the professionals are smart enough not to pour all their cash into a small amount of property. Gearing up to a sensible level to maximise opportunities is likely to be a more successful approach.
Partly due to the difficulty in the mortgage market rental demand sees no sign of slowing down and property types which do well at auction for the professionals are terraced and traditional mid-market semi-detached houses.
Another trend in the auction room is the rise in parent property investors. With university fees soaring to £9,000 per year in 2012, parents in the position to buy will go to the auction rooms to purchase properties to let to their offspring, rather than paying property rents to a third party. Investing is definitely a growing trend amongst parents, student property can be a solid investment for the future in key areas and there are excellent deals if you do your research.
There's enough stock there for the taking and we're certainly gearing up for 2012 to be our busiest year ever.
