Ravi Chandran
Rounding up 2018, JLL, a prominent real estate services company said that the total number of properties successfully sold in auctions fell by 23 per cent from 44 properties in 2017 to 34 properties in 2018. Similarly, total value of successful auction sales fell more than 53 per cent from SGD 101.50 million in 2017 to SGD 54.12 million in 2018, it said.
The total sales quantum of properties successfully sold in auction, being SGD 54.12 million in 2018 is 7-year low since 2012.
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Figure 1: Total Sales Value During Auctions from 2012 to 2018
Residential properties remained the bulk of properties successfully sold in auction – which stood at 83.6 per cent of the SGD 45.27 million of total sales.
JLL said that the largest sales hammered in 2018 includes a 3½-storey semi-detached house at 25 Pasir Ris Way in May which was sold at SGD 5 million, as well as a duplex penthouse located at 214A Ocean Drive, The Berth By The Cove and a 3½-storey strata-titled semi-detached located at 11 Holland Link, Eleven @ Holland. Both were sold at SGD 3.25 million each in February and September respectively.
A notable trend observed over the years, was the increase in number of mortgagee properties reflected in the sales listings since 2013 after the introduction of TDSR (Total Debt Servicing Ratio). Owner’s sales however saw a significant jump in number from the past year with 507 properties in 2017 to 737 properties in 2018 which equals 45 per cent increase.
JLL noted that this year also saw the sales quantum for private residential mortgagee properties totaling to SGD 24.93 million, which is record low since 2014 (five year low).
Average value of properties successfully sold in auction ranged from $510k to $5 million.
Ms Mok Sze Sze, Head of Auction and Sales at JLL, noted: “The looming trade war and introduction of new cooling measures have caused buyers to stay on the sideline especially in the second half of this year. This has impacted the residential property market significantly more than other sectors.”
She added: “We foresee more repossessed properties to come into the market next year. The increase could range between 5 to 10 per cent year-on-year. More owners are also likely to continue to sell their properties through auctions as they learn more about the advantages of an auction sale.”
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Earlier this year, real estate stakeholders observed that the auction market was heating up on the heels of en bloc sales fever. They said that while the number of new properties put up for sale has remained unchanged year-on-year, the number of properties sold rose.
The total value of properties successfully sold at the auction market was also said to be over 30 per cent higher from Quarter 1 of 2017.
The increased activity in the auction market was observed to reflect the positive sentiments and strong demand in the market. The exuberant property market sentiment became muted after the Government introduced a slew of property cooling measures since July. The Government said that the measures were necessary to prevent a property bubble from forming in the real estate market of Singapore.
Unlike other auction markets, the present-day auctions in Singapore may not result in significant savings for the successful bidders. The bidding wars of the past which saw properties being sold for higher prices than their valuation price are also almost non-existent.
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Most “star buys” and “exceptional deals” may refer to a mere 5 to 7 per cent savings from the valuation price. Past auctions suggests that most auction properties sell at close to valuation prices. This is because most property auctions here are not comprised mainly of distressed sales. The fact that most real estate in the property auction market do not have a ‘sell-by-date’, or reserve prices are other reasons why the prices in the Singapore market are much higher than elsewhere.
The reserve price for real estate in the property auction market here is set by the sellers and is based loosely on the valuation. This is another reason why it’s hard to find a good buy at property auctions here.
The successful bidders of auction properties here also have to pay only between only 5 to 10 per cent in cash (the rest is paid with a bank loan, or an in-principle approval from a bank). This is unlike property auctions in other markets were successful bids would have to be paid for with all cash. This is another reason why property auctions here is not so exciting.
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