The recent recovery in the housing market is likely to have been built on unstable foundations, a group of economists claims today, following a drop in demand and prices at property auctions over the summer.

The average property sold at auction last month achieved a price of only 70% of what the same home could be expected to achieve in the conventional market, where homes are bought and sold through estate agents. This 30% discount has grown from 10% three months ago, Fathom Consulting said, indicating demand for homes sold at auctions plunged after recovering earlier this year.

Danny Gabay, director of Fathom, said the increasing discounts available in property auctions was a harbinger of declines to come in house prices.

Financial Times