The auction market fell by 59.7% in 1H2023, with the lowest sales value in three years

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In the local property auction market has successfully sold 11 properties during the initial six months the year. A study note by Edmund Tie states that the total value of transactions for sold properties was $15.2 million.

This was the lowest value reported by auction houses since 1H2020, which was the beginning in the pandemic Covid-19 in which just one property was auctioned at $0.94 million. This is a substantial decrease from 59.7% compared to 2H2022 that saw 17 sales totalling $37.7 million.

As per Joy Tan, head of auctions and sales of Edmund Tie, the low values of sales in the 1H2023 period resulted from “the properties hammered being of low value, with the majority of them being under or near the threshold of S$1 million. There was one high-value sale that was more than $5 million”.

The “high-value deal” included a three-storey semi-detached home located on Vaughan Road that was transacted for $6.3 million. In addition seven of the winning properties that were auctioned off were industrial properties and the remainder comprised of three residential properties as well as one office property.

“Additionally due to the impact of the rate of interest that is high and the cooling measures that were announced in April, and the general uncertainty of macroeconomic conditions buyers have generally taken an open-ended stance,” says Tan.

She says that over the last few months, investors have been showing a greater acceptance of leasehold properties that have shorter leases, typically ranging from between 30 and 60 years. “This is probably due to investors’ greater risk tolerance, given that markets for financial assets remain volatile and a shift in their preferences towards investment alternatives.”

Beware of the new residential private projects that are scheduled to go on sale in the coming quarters, prospective buyers are putting off buying, according to Tan and adds external factors like the fear of a recession coming and rising rates of interest are also affecting sales.

Looking ahead, she anticipates for mortgages to start picking up in 2024 only because of the time gap between repossessing banks properties and then putting them on auction. Commercial listings are also expected to attract more buyers. “Given commercial transactions do not trigger additional buyer’s stamp duty and the increasing number of office spaces for families within Singapore offices, high-end office properties are likely to also be sought-after,” she says.