FEWER properties in Singapore went under the hammer in the third quarter of 2024, despite current economic cost pressures, a market report by property consultancy Knight Frank found.
Published on Monday (Oct 28), the report showed that there were a total of 86 auction listings in Q3 – including repeat listings. This is down 25.2 per cent from Q2’s 115.
Year on year, listings fell 15.7 per cent.
The majority of these auction listings were for residential properties at 51.2 per cent, or 44 listings. Some 26.7 per cent of listings (23) were for industrial properties, and 18.6 per cent (16) for commercial properties. The remaining three listings were for shophouses.
Mortgagee and owner-sale listings were almost equal at 40 and 41, respectively, in the third quarter.
Of the 40 mortgagee listings, 19 were for non-landed homes. In comparison, there were 24 residential mortgagee listings in the prior quarter, comprising 20 non-landed homes and four landed properties.
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“Against the run in expectations, mortgagee listings eased despite the prevailing credit stress on underperforming properties given the high interest rates,” said Knight Frank. “Perhaps with the arrival of a long-awaited interest rate cut by the US Federal Reserve and the likelihood of reducing interest rates in the months ahead, property owners were motivated by a knee-jerk reaction to make good on non-performing loans with the promise of relief in sight.”
Meanwhile, around 59 per cent of owner-sale listings, or 24 listings, were for residential properties in Q3. This was almost half the 47 listings recorded in the previous quarter.
Like in the case of mortgagee listings, Knight Frank attributed the decrease in residential owner listings to some homeowners holding out till the impact of the interest rate cuts materialises in the home loan market. “(This was) in hopes that there will be more buyer interest in their property when the financing environment becomes more benign.”
More forced sales
The first nine months of this year also saw the listing of four management corporation strata title (MCST) sales, versus zero from a year ago. This includes two freehold industrial properties at Mactech Building in MacPherson in the third quarter. The two were sold for S$1.8 million and S$2.7 million, a premium of around 20 to 34 per cent from the opening price of S$1.5 million and S$2 million, respectively.
Another 60-year leasehold industrial unit at Gordon Warehouse Building in Bedok was sold at a 9 per cent discount from its opening price of S$330,000.
This was a rare sight as there were more non-residential than residential property MCST listings, Knight Frank said.
“Likely, these properties were listed due to unavailable owners, feuding owners and/or owners who left the country and efforts to trace them have been futile,” it said. Under the Building Maintenance and Strata Management Act, the MCST of a development has the power to force the sale of a unit to recover money owed.
The consultancy also pointed out that it is not usually possible to view properties listed under MCST sale due to a lack of access.
These units are therefore typically priced lower when compared to mortgagee and owner listings, said Knight Frank. “Nevertheless, a property being auctioned as an MCST sale can still present an opportunity for buyers.”
Overall, just five properties were sold under auction for a total of S$6 million during the quarter, translating to a success rate of 5.8 per cent.
This was higher than the three properties (out of a total of 115 listings) sold in the previous quarter, which worked out to a 2.6 per cent success rate.
Knight Frank head of auctions and sale Sharon Lee noted that in general, distressed sales on the auction platform appear to be few in the third quarter despite the current economic cost pressures. “Nonetheless, many owners are increasingly realising and harnessing the auction platform to test the market and attract buyers, with hopes of a favourable private treaty deal,” she said.
The consultancy reckoned there will be an increase in both distressed properties and owner-sale listings on the auction platform.
Mortgagee listings, in particular, may increase in the coming few quarters before diminishing, with “the count of distressed properties getting worse before getting better”. “This can favour buyers and investors on the lookout for opportunities at more affordable levels especially in a time when interest rates are coming down,” it said.
With more activity expected in the real estate market in the remaining months of 2024, Knight Frank predicts a success rate for the whole year to be just under 6 per cent, at the lower end of the 5 to 7 per cent range it originally projected.