Auction prices indicate further house price falls

A new report from Fathom Consulting shows that the average selling price of houses at auction has fallen to 70% of the open market value, compared to 90% three months ago.

According to the economic and financial market analyst, the data suggests that UK property prices may dip again this autumn.

The research is based on the Zoopla Auction Price Index, which monitors auction sale prices against open market sales.

The widening gap suggests bidders are looking for big discounts because they expect property values to decline in future.

However, while action prices have been falling, Nationwide and Halifax have both reported house price rises during the summer, with the Halifax index showing a 0.8% increase in August.

The conundrum could be explained by the fact that auction sales have been dominated by property investors and bargain hunters since the end of last year.

Demand from this pool of purchasers could therefore be weakening as resources dry up.

Fathom director, Danny Gabay, comments: “We would expect auction prices to react more quickly to changing market conditions than conventional measures, which suggests that we may see house prices falling again in coming months.”

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