More properties are being listed at auctions, but success rates remain low – here’s why.
Despite the hike in the number of properties listed for auction in the first quarter of 2019, the probability of having the properties sold fell to dismal lows, reported Singapore Business Review.
Knight Frank data showed that the number of auction listings for Q1 more than doubled to 362 over the same period last year, while Colliers International said the number of auction listings rose 98.9 percent year-on-year to 370.
Tricia Song, head of research for Singapore at Colliers International, however, revealed that these auctions posted a success rate of only 1.35 percent in Q1, down 45.4 percent year-on-year.
The total value of properties sold at auction also fell 26.1 percent year-on-year to $11.57 million, she added.
Meanwhile, Huttons marketing and communications head Hector Tan believes that the low take-up rate could be due to Singaporeans becoming more “selective and savvy in the type of property they want to own”.
He noted that the demand for “choice, niche properties that offer a mix of lifestyle luxury and unique identity, will remain strong in the auction market”.
Steven Tan, director for capital markets and investment services at Colliers International, also attributed the low sales to the perception that properties under auction are not an attractive buy.
“Going forward, we do not see a recovery in the success rate over the coming months, because the residential market will continue to stay flat or dip further.”
Nonetheless, auction listings are still expected to increase even as the demand-supply imbalance continues to place sellers at a disadvantage.
Data from Knight Frank indicate that majority of auction listings are under mortgage sales which skyrocketed 112 percent year-on-year to 159 listings in Q1.
A mortgage sale occurs when property owners could no longer repay their loans, leading the bank to sell their properties in order that their debts may be repaid.
“We expect the (rise in mortgage sales) will likely continue in the coming months. There are many new development units in the market that remained unsold, and should prices continue to fall, it could depress the residential market further,” said Colliers’ Tan.
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Fiona Ho, Digital Content Manager at PropertyGuru, edited this story. To contact her about this or other stories, email fiona@propertyguru.com.sg
