The Auction Index
I used to keep a monthly auction index which was available to members. Very few people emailed me any comments about it, and no-one apparently noticed when I stopped updating it, so I have not published the index for some time.
In an active market the auction index is very useful to show the direction of the market over the short term. It is also very useful at any time in showing whether prices are generally too high, too low, or about right.
It’s not difficult to guess how I do this, but I’m not explaining it. However, I’ve decided to give the odd snap-shot of how the auction index is behaving. Maybe I’ll update it quarterly on the Unique site. At the moment you might be interested to note that generally speaking the index is too high. It is in the range of 15-25, which means prices are too high. That doesn’t necessarily mean they are likely to fall, but it does mean that in general current prices do not give you value for money.
The best deals are to be had when the auction index is below 10. Above 20 and the prices are too high. The latest auction I monitored in the South-East was exactly on 20. So it is high but not dangerously so. I still say there is plenty of room for prices to fall, but the mood of the market seems to be that prices are about right.
In the north I recently found the figure at 25. That is way too high. This means that we have the unusual situation of prices being perceived as too high in the north but not quite so high in the south. Expect more falls in the north than in the south.
I hope that rough guide helps, and if anybody wants me to develop this theme, do get back to me.
john
The Unique Property Blog 
Hello John,
Sorry for me but I just don’t understand the index auction that you’re talking about.
Is it just real estate auction or général auction?
And auction of which country?
Fran
Sorry Fran,
being a property blog, you can take it I mean real estate auctions, and I am talking about the UK.
Auctions are the high speed end of selling, and as such prices are indicative of where the market will be in, say, three months time. Looking at the indices from various parts of the country I note that prices are holding up. I see no sign of a collapse in prices in the near future, but the market does seem to be unreasonably strong bearing in mind the charts also show wages are not rising much (they are indeed falling in real terms).
The figures for 2011 show wages up 1.4% over the year, with inflation running at just over 5%. This means a fall in real terms of about 3.5% in the value of the average pay packet. Since mortgages are paid for out of wages you cant expect prices to stay up when real wages are going down.
What I am trying to highlight is that the market does not want to fall, and that there is strong support for prices at these levels, but that, given we are in a recession and wages are falling, current prices are a bit over-valued. What that indicates is that in all probability prices will remain static for much of the year, with maybe a slight fall towards the end of the year.
Does that help?
john
Hi John,
What do you think about in investing in real-estate in the US? The neighbour of a relative bought a 2 bedroom/1 bath in Florida for 14,000$ and I understand these deals abound.
On the other hand, in Canada, I hear from relatives real-estate prices are still going up (and they have yet to come down there in the first place). I was told it’s because of the Chinese scooping up lots of real-estate in Canada and driving up the price. I wonder though, if that’s indeed the case, why aren’t the Chinese focusing on US real-estate? It seems to be the best value. How can you go wrong in the medium or long-run with investing only 14,000 $ in a house .
I’d love to hear your thoughts. Thanks a lot.
Mike
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