The discount homebuyers can expect when buying property at an auction has fallen to its lowest level in 15 months as confidence starts to return to the housing market.

Those buying at auction in May achieved prices roughly 11% lower than on the conventional market, in contrast to the 40% discount common at the turn of the year.

The return of a more normal relationship between property auction prices and the conventional market is another sign of firmer demand, which has been evident in many indicators in recent weeks.

It will also encourage lenders, who are likely to lose less if they are forced to repossess properties and sell them at auction. But the continued presence of a significant discount at auctions is a sign that few believe the housing market is about to take off again.

Financial Times