Property auction sales muted in Quarter 3 of 2018

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The property auction sales is comparable to introduction of Total Debt Servicing Ratio in 2013 says a report from Edmund Tie & Co (ET&Co). Q3 2018 saw a total units’ sales value of $10.44m in the auction market. This reflects a year-on-year (y-o-y) drop of approximately 77.1 per cent, from $45.59m in Q3 2017, which may have been a result of the new cooling measures effective on 6 July, and the Hungry Ghost Month.

The units sold via property auction sales in Q3 2018, excluding private treaty sales and units transacted before or after the auction, are as follows.

Property Auctioned amount Property type
Eleven @ Holland, #01-11, 11 Holland Link (D10) $3,250,000 Residential
The Arte, #17-12, 23 Jalan Raja Udang (D12) $1,480,000 Residential
ECO, #02-52, 283 Bedok South Avenue 3 (D16) $760,000 Residential
Southaven 1, #06-05, 41 Hindhede Walk (D21) $835,000 Residential
Meadow Lodge, #03-14, 31 Chun Tin Road (D21) $1,450,000 Residential
The Commerze @ Irving, #07-13, 1 Irving Place (D13) $990,000 Industrial
Ubi Techpark, #07-30, 10 Ubi Crescent (D14) $660,000 Industrial
Tuas Lot, #02-13, 50 Tuas Avenue (D22) $483,500 Industrial
Jurong Foodhub, #06-19, 15 Jalan Tepong (D22) $535,000 Industrial

Q3 2018 property auction sales saw only nine units that were successfully knocked down, with five residential properties and four industrial properties totalling $7.78m and $2.668m respectively.

While all eight of the nine units sold under the hammer were mortgagee sales, several owner’s sale listings were sold before or after the auction via private treaty.

property auction sales
Image credit: Pixabay

This quarter also saw a lack of high quantum properties sold via property auction sales.

Despite the sale of 10 units with a total value of $19.64m in Q2 2018, there was still a 46.8 per cent decrease q-o-q. Q2 2018 saw several high-quantum landed properties, such as 25 Pasir Ris Way (D18), sold at ET&Co’s auction at $5m, 42 Hoot Kiam Road (D10) and 26 Burghley Drive (D19), sold at $3.2m and $3.12m respectively. The highest quantum sold this quarter was a strata-titled semi-detached at Eleven @ Holland, knocked down under owner’s sale at $3.25m during Edmund Tie & Company’s auction on 26 September 2018.

Head of Auction & Sales, Joy Tan, commented, “Industrial and commercial properties sold are on the rise since the latest adjustment of the Additional Buyer’s Stamp Duty and other new cooling measures introduced in July 2018.

“The cooling measures, coupled with the Hungry Ghost Month, has not only affected market sentiments among new and resale private homes, but also on the auction front. Quarterly sales have not been this low since the introduction of Total Debt Servicing Ratio on 29 June 2013, where auction sales in Q3 dipped to $4.6m from $7.6m in Q2, and sentiments stayed low into Q4 at $3.9m.

“Residential buyers, especially those who are seeking to buy their second or more properties for investment purposes, have adopted a wait-and-see attitude, while sellers have yet to adjust their price expectations. With this, as well as the current economic outlook and Trade War negotiations, we expect the property market to be generally muted until after the Lunar New Year in February 2019.”

Unlike other property auction sales markets, successful sales 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.

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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.

Parliament surprised the property market in Singapore in the first quarter of 2018 by announcing an increase in the Buyer’s Stamp Duty (BSD. It was expected that this move would spur both local and foreign buyers are returning to seek out good deals from the property sales auction market. It remains unclear if this has happened.

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