ANALYSIS OF SINGAPORE RESIDENTIAL AUCTION MARKET, AN

Abstract

In any residential sale, a seller is mainly interested in two things: price (net proceeds after sales expenses) and time period (how long it takes to convert the property to cash). In this study, we focus on the price factor, that is whether a seller is able to dispose of its property at its reasonable reserve price, particularly through auction. The distinction in performance of the various residential submarkets in meeting the minimum acceptable price and the different level of psychological effect subsisting in each submarket are analyzed. The hypothesis of whether a lower opening price to the reserve price will induce higher bids and thus deriving a higher premium is also tested. In the dissertation, it is found that a relatively low opening bid will not help to command a premium. Instead, any fall-through auctioned property with a low opening bid will create a repercussion effect as subsequent negotiation which follows will set off with the low opening price as a base. In addition, the number of bidders for a property has a highly significant positive impact on the amount of premium achievable. Another conclusive finding is that landed properties, especially detached houses, are more suited to the auction method of sale compared to nonlanded ones, stemming from its inherent characteristics of higher heterogeneity and sparse transacted comparable.