THERE were fewer than expected property auctions last year during the pandemic but there could be an uptick later this year.

According to AuctionGuru, the largest auction information network in Malaysia, auctions decreased by 25% in 2020 compared to 2019. Last year saw 27,541 auctions with a total value of RM14.25 billion while 2019 had 36,645 auctions with a combined value of RM19.84 billion.

Ernte Auction House Sdn Bhd executive director Gary Chia said real estate experts had predicted a sharp increase in auctions last year but this did not happen.

He said this could be due to movement curbs as well as loan repayment moratoriums offered by the banks.

Chia said the first half of the year will see more properties such as serviced apartments, SOHO (small office, home office), SOFO (small office, flexible office) and SOVO (small office, virtual office) units going on the auction block.

These include properties that were bought to be rented out as bed and breakfasts

Auctions are also growing for more expensive properties, such as semi-detached houses and villas.

“(Because of the lockdown) there are no tenants, but maintenance fees must still be paid. The rate of return is not high and it is difficult to repay bank loans,” Chia told The Malaysian Insight.

Chia said buyers are hoping to snap up good deals as the pandemic drives down property prices 

Typically, the selling price of a property in a bank auction is based on the market price. The price may be reduced by 10% in each subsequent round of auction if the property fails to sell.

“Buyers are waiting for the fourth or fifth round of price reductions to buy at 30-40% lower than the market price,” said Chia.

MNP Auctioneers Sdn Bhd managing director Stephen Soon is not expecting more auctions this year as bank loan repayment moratoriums are still available.

However, he expects more properties valued at more than RM1 million to go under the hammer. He said this is because the Covid crisis has had an impact on even the high-income earners.

Malaysian Association of Real Estate Agents chairman Chan Ai Cheng there are also second-hand or sub-sale properties on the auction market.

These are from owners with multiple units who are unable to service their loans.

“Under normal circumstances, the owner will try to sell the property on the open market first and not through a bank auction. An auction will be the last resort,” she said.

Second-hand properties on the auction block are mostly high-rise units. There are landed properties also but in smaller numbers.

Chan added that the pandemic has also disrupted the plans of would-be homeowners.

Those who had wanted to buy a home have instead decided to continue rentig after facing financial pressure from the lockdowns and loss of jobs and incomes.

Chan said “good deals” can be found now in the auctions. – June 21, 2021.