What is happening to classic car prices?

£15k no offers, must be trailered away, sweep up the rust on your way out

I like to keep an eye on the classic car market. In fact economics in general is an interest of mine, though one I don’t claim to have a comprehensive understanding of, unlike some armchair economists who will espouse whatever platitudinous opinions about economics fits their own world view. As far as macroeconomics, that is economics on a large scale, goes it's all highly subjective and political.

Classic car prices however are good for observing some basic, more objective, principles of economics that occur. The pandemic restrictions in the UK have had a huge impact on the market with auction houses reporting record sales and the majority of cars now selling at auction at the top end of their estimate or above.

The main reason is simply the principle of supply and demand. For a significant period of time it has been difficult to privately sell a car and as such the supply of classic cars on the market has been greatly diminished. Even classic car dealerships have been impacted by the restrictions. Auction houses however, many of which have had to rapidly innovate, remain the perfect socially distanced broker for a sale. Taking place online, with transportation options readily available to move cars to and from their premises, they have dominated the market in the last 6 months or so. This has been so significant it wouldn't be surprising to see a long term shift of classic car sales moving from platforms such as eBay onto the many more diverse auction platforms out there. Many of which offer the advantage of a smoother sale that can safely take place remotely.

All this has caused an inflation of classic car values, particularly in cars at the low to mid range which makes sense when you consider supply of these is normally far greater. Of course supply of classics will increase as the pandemic wanes. However as we've seen repeatedly from lifting of restrictions, there is an effect of 'pent-up demand' which will mean these inflated prices could stay for some time.

It's not unreasonable to expect in a year or so for values of classics to settle and probably even drop, as the enthusiastic private sellers who have seen how well cars have been selling at auction rush to flog theirs from home at higher prices. After the initial rush when restrictions are lifted some of these sellers may be disappointed to find that the long term economic effects of the pandemic combined with a boost in supply will cause values to drop back to similar levels we were seeing before the pandemic.

Where does this leave a classic car enthusiast who wants to buy a car?

The obvious thing to do if you're interested in buying a classic at the moment or spot something you really like the look of is not to get carried away. Don't fall into the trap of spending more than you can afford just because prices are, hopefully temporarily, inflated. It would be far better to wait a year or two until prices settle down. But that is making a assumption that they do. Even though the evidence points towards this markets are unpredictable things, because the people that make decisions affecting them are too.

I have written before in 'the future of classic cars' about rising values (amongst other things) preventing a more diverse range of people taking up the hobby and becoming classic car owners. Personally I think this is bad for everyone involved in the community so I certainly hope we see things change.

For now whether you want to buy a classic yet or not, the best thing you can do as a prospective buyer is learn as much as possible about the car(s) you're interested in and make sure you're not looking at something that isn't what its valuation or estimate would suggest. Don't forget you may need a budget for maintenance, repairs or even restoration costs which could come down the line and that we are currently in a very economically uncertain place.

But I've been cooped up inside and want something to look forward to!

If you really want to buy something then go for it, just do so armed with as much information as possible. I certainly can't judge having bought my current Alfa GTV unseen from an auction (benefiting charity) last summer. There's been plenty of other cars I've seen pop up I like the look of in the last year or so too.

However one final point I wanted to make: Great as the modern 'remote sale by auction' is and much as auction houses and platforms have upped their game providing more information about cars for sale than ever before, don't forget the joy of getting outside and inspecting vehicles in person. There's no doubt you're more likely to make a better decision when you view a car in person.

Whether or not you're 'in the market', it's important to remember why you like classics in the first place. The classic car community is in large part a friendly one and talking to owners about their cars at shows etc. is part of the fun and the sort of thing that gives you much more of an understanding of the ownership experience of different cars.

So whether you decide to put off any purchasing decisions and even though it seems a way off being a reality at the moment, don't forget that the opportunity to get out in any current classic you may have and see others in the metal will return and that will be something to look forward to regardless.

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