SINGAPORE property auction listings could rise by 10 per cent in 2020 as more properties are put up for sale amid an uncertain environment, Colliers International said on Tuesday.
This is particularly in view of the potential economic impact should the Covid-19 outbreak become protracted, the real estate services firm said in its latest research report. "In particular, mortgagee sales in the retail, industrial and residential sectors could increase in the second half of 2020," said Tricia Song, head of research for Singapore at Colliers International.
"Given the uncertain environment, we anticipate that the price gap between sellers and prospects could narrow and in turn, sales and success rate may improve."
The predicted rise in 2020 follows a strong 2019 for the number of property auction listings.
Auction listings had risen 34 per cent year on year to 1,458 in 2019 as both owner listings and mortgagee listings saw strong increases. Due to a more challenging economic environment, mortgagee listings had surged 59.1 per cent to 751 in 2019, driven mainly by the residential sector.
"We believe the higher mortgage payments due to rising interest rates during 2015 to 2019, coupled with a subdued residential rental market, have contributed to the increase in residential mortgagee sale listings," said Ms Song.
Other potential reasons cited by Ms Song for higher default rates were personal circumstances such as job loss or bankruptcy. Post-cooling measures in July 2018, distressed owners might also have been unable to dispose of properties quickly enough, leading to loan defaults.
Owner listings rose by 14.8 per cent to 707 as owners continued to sell their properties via auctions for maximum exposure and a higher chance to achieve optimal prices. Residential property listings jumped 54.1 per cent year on year to 798 and retail listings rose 21.8 per cent to 302.
Industrial listings increased 10.5 per cent to 306 while office listings were up 17.1 per cent to 48. Properties sold at auctions declined 40 per cent to 21 properties in 2019 from 35 properties in 2018 while a rise in the number of listings contributed to the success rate falling to 1.4 per cent in 2019 from 3.2 per cent a year ago.
The 1.4 per cent success rate is the lowest annual level in Colliers' database. The declining success rate reflects the continued price gap between buyers and sellers, said Steven Tan, senior director of capital markets at Colliers International.
He added that only eight out of 21 properties sold during auctions were transacted above their respective opening prices, indicating that buyers remained cautious during auctions and sellers were still holding onto prices.
"It may also be a case of buyers needing more time before taking the plunge, which resulted in some sales being done after auction sessions – these sales are not reflected in the data set under successful auction sales," he said.
Adapted From The Business Times, Mar 11 2019