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Going, Going... Gone! Auction sales picking up

In line with the general improvement in the economy and pickup in consumer confidence in recent months, several auctioneers in the Klang Valley are reporting that auction property sales have been edging up since June.

Licensed auctioneer Zaarif Zainal of First Auction House Sdn Bhd says sales have increased about 20% starting in June as he managed to sell 18 units priced below RM200,000 in two auctions.

“On June 26, some 16 properties were auctioned off and more than half of these were landed ones. Landed properties in good locations are always in demand as there are not many in the auction market compared to flats and apartments,” says Zainal, whose firm is on the panel of licensed auctioneers for several banks in the Klang Valley. He adds that this time around, most buyers purchased for their own occupation.

Zainal also says the number of properties in his auction list has also increased by 25% in June. “By June, the outstanding instalments due to the banks may easily exceed more than six months. Therefore, some banks will likely accumulate these non-performing loans and try to recover them by auctioning off these mortgaged properties,” says Zainal.

City & Country randomly monitored condominiums on auction in June and July, with a minimum reserve price of RM250,000. These sampled landed properties were located mainly in the Klang Valley.

Property Auction House Sdn Bhd’s licensed auctioneer Danny Loh confirms the increase in auction sales since June. In his case, it’s a 10% sales spike. “One of the reasons for this could be the lower fixed deposit rates offered by the banks over the past nine months. This has prompted some investors to find an alternative way of investing their money, and property is one of the lower risk investments,” he says.

Loh adds that auctioned properties have become a popular choice with investors nowadays as these are associated with "cheap buys". Auctions can also be a boon for those who cannot afford houses in sought-after locations in the Klang Valley as they can snap up a good property at a significant discount.

Another licensed auctioneer, J M Lim of Pillay Management Services, says he has also seen an overall increase of about 10% since June. Of these, 20% consisted of landed properties while the rest were apartments and condominiums priced from RM70,000 to RM400,000.

“This time around, I think the increase in sales was due mainly to lower prices as most properties were sold on the second or third auction, when the reserve price was at least 10% to 20% lower than the initial market price,” says Lim.

Lim adds that the majority of the properties auctioned are flats and apartments. “Many still prefer to reside in landed properties rather than in condos. Condo buyers are mostly investors who do not really occupy the units themselves, so when times are bad, they are prepared to let go of their investments.”

For Zakry Ariff, a licensed auctioneer with Shaz Auctioneers & Consultants, overall auction sales have also improved, albeit slightly, around June and July compared with the earlier months.

“Among the landed properties, there is an increase of about 5% in sales, while the increase in the number of properties assigned to me for auctions is about 30%. Most of these properties are in Ampang, Cheras and Bangi, with prices starting from RM200,000 and below,” he says.

Some notable properties successfully auctioned recently was a freehold intermediate 2-storey terraced house, off Jalan Nusa Putra 1/1A in Puchong. The terraced house, with a land area of 2,000 sq ft, was sold at the reserve price of RM250,000 on its first auction.

In Subang Jaya, a 2-storey terraced house, with a land area of 1,600 sq ft, was sold at the reserve price of RM288,000 on its second auction. The house, with a leasehold tenure, is in Persiaran Wangsa Baiduri 1.

A freehold 2-storey semi-detached house, off Jalan Anggerik 2D/1 in Prima Beruntung, Rawang, with a reserve price of RM280,000, was unsuccessful on its third auction. A property going for its fourth auction and which remained unsold was a 2-storey freehold bungalow at Bandar Country Homes, Rawang. The reserve price stood at RM275,400.

The following are some properties that were up for auction recently.

 

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 773, Sep 21-27, 2009.

 

 

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