Fewer mortgagee sale listings in 1Q2024, but owner sale listings up 48% y-o-y
Auction listings fell in 1Q2024 as Lunar New Year festivities resulted in the postponement of some auction activities, according to Knight Frank Singapore. In an April research report, the consultancy notes that 90 auction listings (including repeat listings and excluding properties sold outside of auction) were recorded in the first quarter, falling 9.1% q-o-q.
However, auction listings were up 16.9% y-o-y, with the bulk of the increase coming from owner sale listings.
Residential properties made up 43 (47.8%) of all listings in 1Q2024, with the remainder comprising retail (19), office (eight), and industrial (18) properties.
Five properties with a total gross sales value of $13.2 million were successfully sold. This translates to a success rate of 5.6% for the quarter, up from the 4% success rate in 4Q2023. Two of the properties sold were residences, while the other three were industrial properties.
Last quarter, there were 22 mortgagee listings, or 22.4% of all listings, down 29% from 31 listing in 4Q2023. Of the 22 mortgagee sales, 12 were residential properties, four were retail, five were industrial properties, and just one was an office unit.
Two mortgagee listings were sold at a premium in the last quarter. A 1,410 sq ft, three-bedroom apartment at The Sea View had an opening price of $3.5 million. It was eventually sold at $3.6 million ($2,553 psf), translating to a 2.9% premium.
The other property, a 60-year leasehold industrial unit at Vertex on Ubi Avenue 3, was knocked down at $965,00, 4.3% higher than its opening price of $925,000.
Owner sales made up 68 listings in the last quarter, a 3% rise q-o-q from the 66 listings in 4Q2023. This also reflects a 47.8% y-o-y increase from 46 listings in 1Q2023. Of the 68 listings in 1Q2024, 31 were for residences, while seven were for office units and 13 were for industrial units. Retail properties made up 15 listings.
While this marks the eighth consecutive quarter that owner listings have surpassed mortgagee listings, some owner listings may have arisen from distress, notes Sharon Lee, head of auction and sale at Knight Frank Singapore. “In certain cases, financial institutions might encourage owners to dispose of these assets before repossession proceedings are initiated.”
According to statistics from the Ministry of Law, bankruptcy applications rose 11.8% q-o-q and 17.3% y-o-y to 1,125 applications in 1Q2024. Business cessation figures have also increased, rising 23.5% y-o-y to hit 14,205 entities last quarter.
Consequently, Knight Frank believes more private homes and workplace properties will surface in the auction market in the second half of 2024.
Moreover, residential property owners who commenced housing loans in 2021, when interest rates were low, will likely see their borrowing costs rise substantially after their three years of fixed rates lapse. This, coupled with a softening rental market, may see more owners looking to dispose of their properties.
Knight Frank predicts overall auction success rates to be between 5% and 7% for 2024.