Shophouses featured prominently in recent auction sales (Photo: Terence Ong, Wikimedia Commons)
The total number of properties placed on the auction block fell to 141 units in Q1 2016, the first time the volume has gone under the 150-unit mark since Q4 2014, according to a report from Knight Frank.
Although this represents a quarterly and yearly decline of 19.4 percent and 24.6 percent respectively, the number of properties successfully auctioned off doubled from four in Q4 2015 to eight during the quarter under review.
“This translated to an overall success rate of 5.7 percent, a recovery from the record low of 2.3 percent seen in the last quarter of 2015 but a decline from the high success rate of 8.0 percent witnessed a year ago,” said the consultancy.
Still, despite the quarterly increase in successful auctions, total sales volume dropped by 11.2 percent to S$9.6 million from the previous quarter. “This dismal result also represented a significant 73.2 percent decrease from a year ago, when S$35.8 million worth of auction sales was achieved,” noted Knight Frank.
“This could be due to an absence of big-ticket transactions in Q1 2016, with the largest deal being a conserved two-storey intermediate shophouse at 617 and 617A Geylang Road, which transacted at S$2.9 million.”
Notably, shops and shophouses dominated the property auction market during the first quarter in terms of sales. Not only did the number of listings from this segment surge by 145.5 percent quarter-on-quarter to 27 units, this sector also successfully disposed of four units, translating to a success rate of 14.8 percent.
In comparison, the industrial segment recorded a success rate of 9.1 percent, with two properties sold out of the 22 offerings, while the residential market posted a success rate of merely 2.4 percent, as only two properties out of 85 changed hands. For the latter, this also marked the second straight quarterly drop and the lowest success rate since Q4 2013, when not a single unit was picked by buyers.
Meanwhile, 60 properties were put up for auction under mortgagee sale in Q1 2016, accounting for a record high proportion of 42.6 percent of the auction market. Of this, the number of residential properties fell from a record high of 51 units in Q4 2015 to 39 units, while shops and shophouses rose to a record high of 10 units from zero a quarter ago.
“This could be attributed to a weak leasing market on the back of a labour crunch and competition from e-commerce, causing property owners to face increasing difficulties in servicing their mortgage loan,” explained the consultancy.
Of the eight properties successfully auctioned off, mortgagee sales made up six units. This represented 75 percent of the units sold in terms of numbers, 61.1 percent by sales value, and a success rate of 10 percent.
Interestingly, properties priced below S$2.5 million, as well as those costing between S$2.5 million and S$5.0 million, accounted for a higher proportion of the listings in Q1 2016 at 60 percent and 31.9 percent respectively, versus 54.9 percent and 28.6 percent a quarter ago.
Specifically, the number of properties below S$1 million put up for auction rose from 36 units in Q4 2015 to 37 units in the first quarter, making up 26.2 percent of the auction market, the highest proportion since Q2 2013.
Furthermore, the number of successfully sold properties below S$2.5 increased to seven units. Sales value for this category also jumped by 14.6 times to S$6.7 million, representing 70 percent of overall transaction value. All properties disposed via auction in Q1 2016 cost below S$5 million.
Moving forward, Knight Frank expects total auction listings for H1 2016 to surpass 300 units, as this platform becomes a more viable way to market properties.
The number of shops and shophouses placed on the auction block is also forecasted to increase further amid weak retail sentiment, while properties valued below S$2.5 million are more likely to find buyers, given the limits imposed by the Total Debt Servicing Ratio (TDSR).
Cheryl Marie Tay, Senior Journalist, edited this story. To contact her about this or other stories email cheryl@propertyguru.com.sg
