Price of auctioned homes falls 25% in a year

The price of houses sold at auction has fallen by almost a quarter during the past year, according to figures highlighted by the Liberal Democrats.

The average price of the 3,993 houses sold by auction between June and August this year was £130,400 – 23.4 per cent lower than the £170,300 average achieved during the same period last year.

Matthew Oakeshott, the Liberal Democrat Treasury spokesman, said: “These dramatic figures show just how fast house prices are falling at the sharp end. The consensus view is that the decline in house prices over 2008 and 2009 will be around 15 to 20 per cent. Property professionals are now factoring in this fall when buying.”

Richard Morea of London and Country, the mortgage broker, said: “Properties sold at auction could include the increasing number of repossessed houses or those being sold because of probate or a divorce settlement. People who are desperate to sell simply have to take a sizeable cut at the moment.

“For buyers, there are definitely some bargains available at auction, and buy-to-let landlords and developers will no doubt be snapping up these properties, especially if they are cash buyers.

“For other buyers, such bargains are only feasible if they can find the right mortgage. Although lenders have been steadily cutting their rates in recent weeks, the best rates are still only available if you have a sizeable deposit — usually at least 25 per cent of the property’s value.”

Lord Oakeshott said: “The Government must do far more to empower housing associations and councils to buy unsold homes and land, which would save our building industry from collapse. The Government must also act to ensure the banks only use repossessions as last resort.”

But Michael Coogan, director general of the Council of Mortgage Lenders, said: “Lenders must and do see repossession as a last resort.

“We are committed to providing information to borrowers in arrears to help explain the arrears management process, to help borrowers understand what to do and expect, and to set out how their lender will treat them fairly.”