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Auction market slumps 59.7% in 1H2023, lowest sales value in three years: Edmund Tie

/ EdgeProp Singapore |

August 3, 2023 3:11 PM SGT

The low sales value in 1H2023 was due to “the properties hammered being of low quantum, mostly either below or just past the S$1 million mark. (Picture: Samuel Isaac Chua/The Edge Singapore)

The local property auction market successfully sold 11 properties over the first six months of this year. A research note published by Edmund Tie states that the total transaction value for the successfully auctioned properties was $15.2 million.

This was the lowest sales value recorded by the auction market since 1H2020, the onset of the Covid-19 pandemic, when only one property was sold for $0.94 million. It is also a significant drop of 59.7% compared to 2H2022 which recorded 17 sales worth $37.7 million.

According to Joy Tan, head of auction and sales at Edmund Tie, the low sales value in 1H2023 was due to “the properties hammered being of low quantum, mostly either below or just past the S$1 million mark. There was only one high-value transaction that was above S$5 million”.

The “high-value transaction” was for a three-storey semi-detached house on Vaughan Road that was transacted for $6.3 million. Furthermore, seven of the successful properties sold at auction were industrial properties, with the rest being three residential properties and an office property.

“Additionally, on the back of the high interest rates, the cooling measures announced in April and the overall uncertain macro environment, buyers have generally adopted a wait-and-see stance,” says Tan.

She adds that over the past few months, investors are displaying a growing acceptance towards leasehold properties with shorter remaining lease tenures of typically 30 to 60 years. “This is likely due to investors’ higher risk tolerance, as financial markets remain volatile, and a noticeable preference shift to alternative investment opportunities.”

Cognisant of the upcoming new private residential projects set to hit the market over the next few quarters, potential buyers are holding back on their purchases, says Tan, adding that external factors such as fears of an impending recession and higher interest rates are also impacting sales.

Looking ahead, she expects to see mortgage listings pick up only in 2024, given the time lag between banks repossessing properties and putting them up for auction. She also expects commercial listings to garner more buying interest. “Given that commercial transactions will not incur additional buyer’s stamp duty and with the increase in family offices in Singapore, well-priced office listings will also likely be highly sought after,” she says.

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Property Auction