Property auction sales at lowest point in 10 years

Source : Straits Times - 19 Dec 2008

SINGAPORE’S auction market has slumped to its lowest point in more than 10 years in terms of the value of properties sold this year.

But more mortgagee properties are expected to be sold under the hammer next year in the light of the weaker economy.

Only $83.67 million worth of properties have been sold via auction this year, down a whopping 79 per cent from last year, when $407.43 million worth of properties were sold.

This year’s total is also 38 per cent lower than the $135.7 million recorded during the Asian financial crisis in 1998, said consultancy Colliers International.

This year, 68 properties were sold at auctions, well down from 204 properties last year, said consultancy Knight Frank.

The worst performance was in the current fourth quarter, when only 5 per cent of the properties offered at auctions were sold, compared with more than 10 per cent in each quarter last year, it said.

The residential sector was the hardest hit, with sale values plummeting by 88 per cent to just $25.23 million this year, said Colliers International.

Despite the turbulent times, only 270 properties were put up for mortgagee sale during the year, down 58 per cent from 646 properties last year. This is the lowest number seen in 10 years, it said.

Distressed sales, often associated with past economic recessions that led to home foreclosures, have yet to emerge in significant numbers, which explains low auction sales, said Knight Frank.

Since this is seen as the start of a major economic crisis, the number of affected home owners is not significant, it said. But next year, mortgagee sales will rise, said property consultants who foresee loan defaults and forced sales.

Tight credit is likely to mean that when banks are faced with falling property values and growing non-performing property loans, real estate foreclosures could increase, said Knight Frank.

Also, some investors who had bought properties under the deferred payment scheme might need to sell their properties quickly as the completion date draws nearer, it said.