Property auctions rebound in Q2 as interest rates surge: Knight Frank

Owner sale listings more than doubled to 62 properties last quarter, up 121.4 per cent from Q1's 28. PHOTO: ST FILE

SINGAPORE (THE BUSINESS TIMES) - Auction listings rebounded by 47.5 per cent in the second quarter of 2022 as interest rates surged, according to Knight Frank's market update on Monday (July 25).

Including repeat listings and excluding properties sold outside of auction, 118 properties were listed in the second quarter, of which 50 were recorded in June when the United States Federal Reserve announced the most aggressive benchmark interest rate hike since 1994 at 0.75 percentage point.

Owner sale listings more than doubled to 62 properties in the last quarter, up 121.4 per cent from the first quarter's 28. This was also the first recorded increase in owner sales after three consecutive quarters of decline.

Knight Frank said: "While some owners previously chose to sell their properties independently, the expectation of further domestic interest rate hikes and the prospect of better closing prices in a healthy market have led others to explore the auction route."

The real estate agency added that growth was seen in almost all segments. Residential listings rose from seven in the first quarter to 22 in the second quarter, of which half were located in the prime Districts 9 and 10.

"As borders reopened from April onwards with the Vaccinated Travel Framework, investors who have held on to these prime properties are possibly putting them up for auction to test demand from international investors," it added.

Meanwhile, the number of industrial listings gained to 13 from four over the same period. A ground-floor shop unit at Katong Shopping Centre was the only owner sale in the second quarter. The freehold shop unit was sold for $720,000, or $3,186 per sq ft (psf), a 6.3 per cent discount to the initial opening price. According to caveats lodged, units situated on the first floor have sold at an average psf price of $3,406 over the past five years.

Overall, the three months saw 13 properties moved at auction for a gross sales value of $30.2 million, up from nine properties for $21.1 million in the previous quarter. Out of the 13, 10 were mortgagee sales.

Four non-landed homes located in the eastern part of Singapore - specifically Pasir Ris, Tampines and the Bedok planning areas - sold at or below $1 million each. In the central region, a condominium unit at District 1's The Sail @ Marina Bay changed hands for $2.4 million. A three-bedroom apartment at District 3's Reflections @ Keppel Bay was sold for $2.65 million, 3.9 per cent above the opening price.

After dropping to 47 in the first quarter, mortgagee listings inched up by 6.4 per cent to 50 properties in the second quarter.

"While all-time high rents (based on the Urban Redevelopment Authority's residential rental indices) have cushioned mortgage instalments, a combination of rising interest rates, individual financial stress and business failures also contributed to existing listings," Knight Frank said.

It expects that the stress on mortgage payments brought about by rising interest rates may lead to increased listings in the remaining quarters of 2022.

"Likewise, the number of owner listings is also likely to grow as more become open to the reach and the transparency of the auction process, and might wish to take advantage of the healthy private residential market to divest, especially with growing overall success rates," Knight Frank said.

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