Properties put up for auction surge: Knight Frank
Analysts told TODAY that the huge increase in listings, especially in the latter half of the year, was a result of the Government’s property cooling measures which came into effect on July 6.
SINGAPORE — The number of properties put up for auction surged by almost 50 per cent this year compared with 2017, even as the number that successfully went under the hammer fell sharply.
There was a rush of listings in the final three months of this year, with more than a third put up in the fourth quarter, according to data released by property consultancy Knight Frank on Friday (Dec 21).
There were 1,120 properties put up for auction — the highest since 2011 — a 47.4 per cent increase from the 760 listings last year.
Out of the 1,120 listings, 41.9 per cent were residential properties, 22.9 per cent were retail units and 24.8 per cent industrial properties.
Owner sale listings also reached a record high since 2011, increasing by 72.7 per cent. But this was driven by a larger number of listings in the retail and industrial segment.
There were 689 auction listings in 2016 and 788 in 2015, with the majority of listings being residential properties.
About 60 per cent of this year's listings were put up between July and December, with 291 and 380 listings in the third and fourth quarter, respectively.
Analysts told TODAY that the huge increase in listings, especially in the latter half of the year, was a result of the Government’s property cooling measures which came into effect on July 6.
To stem the rise in property prices, the Additional Buyers’ Stamp Duty (ABSD) was increased by 5 percentage points for individuals and 10 percentage points for entities. The loan-to-value limits were also tightened.
Mr Chris Koh, director of property consultancy Chris International, said that buyers were more cautious after the cooling measures and prices did not rise as quickly.
“Sellers, (especially) those thinking of selling urgently, are looking for other means... so auctioning comes into consideration,” he said. This would explain the surge in the number of auction listings this year, added Mr Koh.
The collective sales fever in the first half of 2018 unloaded a large number of property hunters in the market looking for replacement homes, raising price expectations for sellers, said Mr Colin Tan, director of research and consultancy at Suntec Real Estate Consultants.
With the cooling measures, Mr Tan said the sellers probably “realise that they need more exposure, especially for the prices they want”, and hence looked at auctioning as an alternative avenue for selling.
While the auction market served as an additional avenue, it was price that ruled at the end of the day, he added.
PRICE IS KEY
The number of properties successfully auctioned did not increase correspondingly with the number of auction listings, showed Knight Frank’s data.
In fact, it went down from 47 sold last year to 35 this year — a 25.5 per cent decline.
Out of the 35 properties sold, 26 were residential and seven were industrial properties.
The overall success rate for 2018 was only 3.1 per cent based on total auction listings. The success rate declined from 7.1 per cent in the second half of 2017 to 4.7 per cent in the first half of this year. It dipped further to 2.1 per cent in the second half of the year after the onset of the cooling measures.
The success rate in 2016 was 6.4 per cent, and 5.1 per cent in 2015.
With buyers becoming price sensitive, Mr Koh said the avenue used by sellers to move their properties did not matter.
The decline in successful auctions also meant that sellers have not dropped their prices as much as buyers would have hoped.
“Sellers may not be so willing to adjust their prices in response to cooling measures,” said Mr Lee Sze Teck, head of research for property agency Huttons Asia.
“Some of them are in a strong (cashflow) position, so they are not in a hurry to sell.”
The numbers in the auction market were similar to the resale market, which has been affected more by the cooling measures as compared to new launches, added Mr Lee.
Based on caveats lodged with the Urban Redevelopment Authority, Mr Lee said that resale volume for private properties tumbled by more than 40 per cent after the cooling measures. Only 2,672 resale transactions were recorded in the third quarter of this year, compared to 4,700 in the previous quarter.
However, Mr Tan said that the decline in successful auctions does not mean that the demand for resale units has gone down, adding that sellers of resale units have to be “more realistic” in pricing to meet buyers’ expectations.
MORTGAGEE LISTINGS UP
Mortgagee listings, which refer to properties that were repossessed by banks, also went up but accounted for a smaller proportion of total listings this year.
There were 391 mortgagee listings, accounting for 34.9 per cent of total listings, compared with 333 last year, an increase of 17.4 per cent year-on-year.
Residential properties continued to form the bulk of mortgagee listings. They increased 5.8 per cent year-on-year, largely due to higher interest rates and lacklustre economic performances this year, according to Knight Frank.
