Property auction sales sink to a 15-year low

S$62.435m is simply disappointing.

According to Colliers International Auction Performance Year-end Rounder, the Singapore property auction market concluded the year on a quiet note, with only 24 properties sold out of a total of 377 properties that were put up.

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The total sale value chalked up for 2012 is S$62.435 million. Not only is this 34.7 per cent lower than the S$95.624 million that was recorded last year, the total sale value is also the lowest in 15 years.

It is also 54 per cent lower than the total sale value of S$135.7 million that was garnered during the Asian financial crisis in 1998, and 25.4 per cent lower than the S$83.67 million recorded during the global financial crisis in 2008.

Ms Grace Ng, Deputy Managing Director of Colliers International, says, “The decline in the total sale value was due to, among others, the series of cooling measures being implemented by the government in the residential sector – the latest one being effective from October 20121, which resulted in a lacklustre secondary residential market and thinner interest in the high-end/luxury residential market.”

The secondary residential market has been experiencing a stalemate between the buyers and sellers.

Ms Ng continues, “We observe that owners have been reluctant to sell their properties, unless the prices fetched could possibly enable them to make another property investment. Besides, sellers now have strong holding power due to the prevailing low interest rates, as well as healthy leasing activities seen in the mass residential sector that has enabled them to service their loans. Buyers, on the other hand, have also been reluctant to commit to high prices for properties in the secondary market due to a run-up in prices since 2009. Instead, they have adopted a “wait-and-see” attitude – in the hope for a price adjustment, in view of the continued implementation of the government’s cooling measures, Eurozone crisis and the impending slowdown in GDP growth.”

Additionally, the low sale value at auctions for this year could be attributed to the decrease in the number of high-value transactions – those that are valued S$5 million and above.

Only three of such properties were sold this year for a total of S$25.53 million, which is a drop of 20.4 per cent compared to S$32.06 million registered in 2011.

Nonetheless, these high-value transactions contributed to 40.9 per cent of the total sale value. The three high-value properties sold this year included a petrol kiosk at Jalan Ahmand Ibrahim that was knocked down at S$12.73 million, a JTC factory at Loyang Way at S$7.1 million and an apartment in Boulevard Residences at S$5.7 million.