Why are auctions in the news?

There are increasing worries about the difficulties homeowners face paying their mortgages, made worse by figures from the Ministry of Justice that show repossession court orders are up 17 per cent in a year. Many of these repossessed homes are now for sale at auction. Gary Murphy, of Allsop, says that 535 lots, or 38 per cent, of all the properties available in the auction house's sale on May 29 and June 2 will be repossessions. He adds: “A year ago repossessions were just 10 to 15 per cent of the catalogue.” Such figures lend credence to the Council of Mortgage Lenders' prediction that 45,000 homes will be repossessed this year.

Does that mean boom times in the saleroom?

No. The shortage of mortgage finance, and the rapid tightening of lenders' criteria, is hitting owner-occupier buyers and small-scale investors alike. Murphy fears that the mood across the market is deteriorating quickly: “Between our sale at the end of March and the next one at the end of May, there will have been a shift in sentiment and expectations. Prices will have softened.” Transactions, as in the mainstream market, also seem to be falling: the Essential Information Group, the data group, reports that the sales rate at auctions has fallen from 74 per cent last year to 60 per cent now.

Is it all gloom?

Other experts are more optimistic. Chris Coleman Smith, head of auctions at Savills, presided over a sale in London this week and says that he was “encouraged” by the mood in the room, and the crowds that gathered. Buyers also seemed to range from owner-occupiers to buy-to-let investors and “the usual tart-up merchants”. Another auction house reports that wily investors are re-emerging but are waiting until a property has failed to sell at auction before making an offer.

Are bargains emerging for owner occupiers?

Yes. Coleman Smith points to three apartments in a period building just off Kensington Church Street as indications of the kind of properties that are fuelling interest: a studio sold for £315,000 and two one-bed flats for £392,000 and £360,000. And several flats in Tooting, South London, sold for attractive prices, with one, a garden flat estimated to be worth £250,000, selling for £205,000. He says: “Any first-time-buyer or investor should be in the auction room, because there is a window of opportunity out there and it is impossible to say if it will last for another month or for the rest of the year.”

So why are buyers not biting?

The gloomy news about the market continues to pile up. The latest figures from the Royal Institution of Chartered Surveyors this week shows that the mood among agents is the gloomiest it has been in 30 years. And even the Government, which likes to talk up the market, now believes that the best case scenario is a fall of 5 to 10 per cent this year - a projection revealed inadvertently by Caroline Flint, the Housing Minister.

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