Buyers and sellers at stand-off

Posted by goldenpeace on 05-Feb-2009
Analysts caution that banks here may not rush into home foreclosures
THEY are flocking to the auction houses, hoping to find bargains. But each time the starting price is called out, there are audible sighs and shaking of heads. Still too high, say those who have been frequenting property auctions in recent weeks.
Expectations are growing for some fire sales in the local property market, which is increasingly weighed down by the global economic downturn. People who thronged two recent auctions told Today they were keen to sign on the dotted line, but the asking prices remained high, they lamented.
At a Colliers auction three weeks ago, only one out of 12 properties put up for sale was sold. It was a similar situation at an auction held by Knight Frank, where only one out of 17 properties went under the hammer while many attracted no bids at all.
So desperate was the auctioneer at one of the sales that she asked: “Are there any bids - or counterbids?”
A counterbid means an offer below the asking price.
One woman scouting for shop space said she had been visiting auctions and returning home empty-handed. What she is hoping for is a fire sale.
Analysts, however, caution that they do not anticipate such sales to be pervasive.
Said Mr Eugene Lim, ERA’s Asia Pacific associate director: “Isolated cases (of fire sales) will continue, but not very widespread. If it’s widespread, the market will crash … That has not happened and I don’t see it happening for the time being.”
There has been keen interest in both the residential and commercial property sectors from buyers looking to pick up bargains in well-located areas, said Ms Grace Ng, an auctioneer and deputy managing director at Colliers. She added that there have been several enquiries for commercial properties in places such as Toa Payoh, Ang Mo Kio and Clementi, which are in the heart of the town centres and with good frontage.
“There is a healthy interest from buyers, but price-wise, there is still a gap between what sellers are asking and what the buyers are willing to fork out,” said Ms Ng. “The prices that the sellers are quoting are close to valuation, but buyers are offering below that level.”
Both sides are adopting a wait-and-see attitude and the stand-off could last a while yet, for distress sales are few and far between. Last month, only two of the30 properties on two auction lists were court-ordered sales.
A one-storey JTC detached factory with a three-storey office annex along Gul Road was sold for $3 million, 14.3 per cent less than the $3.5 million asking price.
The situation could change in the coming months, with more distressed sales coming on board.
“But these will only come when there is no choice,” said Mr Colin Tan, research director from Chesterton Suntec International.
Mr Nicholas Mak, Knight Frank’s director of research and consultancy, agreed. But he added that banks here might not rush into home foreclosures. “Banks don’t want to send unintended signals,” he told Today. “There’s no joy for banks to force a family out of their home.
“Banks would want to help clients restructure their losses so that they don’t have to resort to foreclosures, which would hurt their relationship with their clients.”
Source : Today - 5 Feb 2009