Going, going... but not totally gone

Singapore's property auction market had a quiet year, chalking up its lowest sales value in 15 years and selling barely one-tenth of the properties put up for auction, as a result of the government's property curbs.

24 out of a total of 377 properties - across various sectors such as residential, retail and industrial - that were put up for sale ultimately changed hands. The total sales value of these properties was $62.4 million, down 35 per cent from the $95.6 million recorded last year.

This year's sales value was 54 per cent lower than the $135.7 million achieved during the Asian financial crisis of 1998, and 25 per cent lower than the $83.7 million during the global financial crisis in 2008.

The market is expected to perform just slightly better next year, and the forecasted sales value at property auctions next year to reach about $70 million, as ample liquidity and low interest rates continue to fuel the sellers' market in the first half of 2013.

Buyers will continue to search for value buys in the auction market, as properties are still considered as a good hedge against the inflation rate, which was at a high of 5.2 per cent in 2011 and averaged at 4.7 per cent from January to October this year.

The auction sales this year had been hit by a series of cooling measures that were implemented by the government in the residential sector.

In particular, the high- end market has been badly hit by the introduction of the Additional Buyer's Stamp Duty (ABSD) last December, which was aimed at taking some steam out of the private residential property market here and targeted non-PR foreigners and corporations in particular. These two categories of buyers have to pay the highest ABSD rate of 10 per cent on any residential property purchase.

In the secondary residential market, a stalemate has been playing out between buyers and sellers.

Residential properties continued to account for the lion's share of auction sales, with $29.7 million or 48 per cent of total sales coming from this segment.

For retail properties, the total sales value at auctions this year was $8.1 million, down 79 per cent from last year, even though they are typically sought after by investors for their higher yields. Industrial space recorded total auction sales of $10.1 million.

Source: Business Times –13 December 2012