By Sharina Ahmad
IN light of the current Covid-19 pandemic, the property auction market will be interrupted throughout the Movement Control Order (MCO). Sellers have been advised to consider pulling their properties from auctions as clearance rates have plummeted amid fear of the virus.
Raine & Horne International Zaki + Partners Sdn Bhd associate director James Tan Keen Meng told FocusM that if this pandemic is prolonged and the lockdown is extended, it will have an impact on the property market.
“The courts and land offices are closed for this period. Auction activity cannot be carried out. Valuers cannot do searches at the local authority to ascertain the outstanding assessment and the respective land offices.
“We cannot carry out site inspections and reports cannot be churned out. There is a demand for cheap landed property but people will need to wait,” said Tan.
He said the situation will leave a negative impact not only on the auction market but on the other sectors as well.
“Business hours are limited and the movement of people with goods and services are limited. Incomes will be affected, thus the ability to purchase will be curtailed.”
He opined that auction success rates are likely to be reduced.
“The macroeconomic scenario remains cloudy. The overhang is still there. Incomes and turnover for businesses are dropping.
“The tourism sector is badly hit and so are the commodity prices. The foreign direct investment (FDI) is dropping. The World Bank projected a 2.5% drop in the gross domestic product (GDP),” he said.
TEN Auctioneers Sdn Bhd CEO Charles Tan mentioned that the auction market in Malaysia has been quite active before the Covid-19 outbreak.
“Due to the lower number of bidders, the number of auctions needed to sell one property is higher than previously. Sometimes, up to five times.
“Beyond that, there were also buyers who faced financial difficulties when they overstretched themselves with their home loans. With the MCO, auctions could not be conducted because these are public events.”
Property auctions generally received good responses in the past as buyers sought homes at discounted prices. Non-performing loans (NPLs) related to properties are also on the rise, pushing more units onto the table of auctioneers.
According to Bank Negara Malaysia’s statistics, the NPLs for the purchase of residential property rose to RM6.82 bil as of September 2019 compared to RM6.03 bil a year ago, the highest since 1Q13. – March 25, 2020