Properties put up for auction surged by 21.7% year-on-year (y-o-y-) to 454 listings (including re-listings) in 1H2018 – the highest level recorded since 2H2009, Colliers International revealed.
According to its Flash report – which tracked transactions and listings in the property auction market in Singapore – listings from all sectors rose on a y-o-y basis during the period, with the exception of the industrial segment where listings fell by 1.1% to 87.
Compared to a year ago, residential listings increased by 15.8% to 234, office listings rose 30% to 13, while retail listings climbed 60.3% to 117 in the 1H2018. Three other listings were for a vacant land and two medical suites.
According to Colliers International’s director of capital markets & investment services Steven Tan, the increase in listings was partly driven by more owners opting to sell their properties via auctions and more mainstream brokerage firms entering the auction market.
Surge in owners’ listings
Owners’ listings rose sharply by 37.3% y-o-y and 3.7% from 2H2017 to 254 listings during the first six months of this year, reflecting an increased interest from owners as they believed auctions would give their properties maximum exposure and the ability to garner the best price. All sectors, except industrial, saw owners’ listings increased y-oy in 1H2018.
However, Tan notes that while owners’ listings rose sharply, mortgagee listings grew at a slower pace during the period amid the improved Singapore economy.
“Looking ahead, we believe mortgagee listings may plateau or rise more slowly with less distress in residential and office markets which have picked up strongly in the last two quarters. Industrial and retail property markets may also start to stabilise by end-2018,” he says.
Slower mortgagee listings growth
Due to the pick-up in the economy over the past year, the growth of mortgagee listings have moderated significantly.
Colliers’ research found that there were 200 of such listings in 1H2018, representing increases of 6.4% from a year ago and 8.1% from 2H2017. This is a drastic slowdown from the 28.5% and 23.7% y-o-y growth recorded in 2H2017 and 1H2017 respectively.
Residential properties accounted for about 60% of total mortgagee listings in 1H2018 at 121 listings, followed by 53 industrial mortgagee listings, 25 retail mortgagee listings, and one office mortgagee listings.
Auction sales value declined in 1H2018
For 1H2018, the aggregate value of properties sold at auctions stood at $35.3 million, 23.6% lower than the $46.2 million transacted in 1H2017 and 42.2% down from $61 million in 2H2017. The decline in auction sales value was due to lower quantum per unit that were transacted during the period.
Of the 21 properties that were knocked down, 11 (or 52.4%) were mortgagee sales: comprising eight residential properties and one each from the retail, office and industrial segments.
Colliers brokered nearly a quarter of the auction sales transactions in 1H2018, selling five non-landed residential properties amounting to $6.8 million, with the largest deal being a condominium unit at Botanic Gardens Mansion which was sold for about $2.7 million.
Auction listings expected to grow
Colliers expects overall auction listings to continue to grow in the second half of 2018, driven by increased owners’ listings across most sectors.
In view of the fresh property cooling measures – higher additional buyer’s stamp duty and lower loan-to-value limits – implemented on July 6 on residential property purchases, Colliers believes some investors could turn to strata-titled commercial units and shophouses as alternatives.
Colliers’ Tan adds: “Despite the new cooling measures, we believe owners who had sold their homes in the past two years via collective sale are still likely to seek immediately-available replacement homes in the auction market. We would still recommend auction as a good platform to seek or sell properties for optimal exposure and pricing.”
Colliers projects higher overall auction sales in 2H2018 than in 1H2018 which should take total auction sales for the full year 2018 to $85 - $90 million. This would be lower than the $107 million auction sales transacted in 2017.