Savvy home buyers are turning to auctions in high-end market

IN recent years, market has seen a spike in auctioned owing to rising residential unit prices, especially in the high-end segment.

According to the Malaysian Reserve, the buyers have mostly cast aside the notions that auctioned , or “rumah lelong”, were associated with misfortunes and inheritance of bad luck to buy up the homes that no one else seemed to afford.

An auction market consultant Mohd Izwan Abdul Latiff said the spike in popularity of auction properties became apparent since 2014.

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This happened as property prices shot up drastically in high demand areas and not in line with the income of the average Malaysian.

“Basically, those who are looking to buy properties in hot spot areas (such as the Klang Valley, Penang and Johor) are finding it difficult to buy the properties that they want,” he was quoted as saying

“People are looking for alternatives to buy affordable properties via auction as you can secure below market value deals.

“As developers continue to increase the launching prices of residential projects, the demand for auction properties rises in tandem,” Mohd Izwan said.

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An aerial view of a residential area in . Source: Shutterstock

Citing figures from AuctionList.com.my, the Malaysian Reserve found over 4,000 property listings on Monday, of which nearly 3,000, or 70 percent were residential properties.

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Usually, the auctioned houses were sold at below market properties when owners fail to repay their mortgages and residential properties made up for RM5.83 ($1.42 billion) of non-performing and impaired loans as at the third quarter of last year.

A large number of properties is also entering the auction market, especially in the major urban areas such as the Klang Valley, Johor Baru, Kota Kinabalu and Penang.

The consultant said more auctioned properties are expected to join the property market.

With the “rumah lelong” property buyers can purchase completed projects below the market price, Mohd Izwan said, adding that risks include legal issues, hidden costs, and loss of deposit.

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Dr Carmelo Ferlito, senior fellow of the Institute for and Economic Affairs was quoted as saying high-end property projects were thriving in the market in recent years to the popularity.

“Such a boom has been accompanied by high prices because of the boom itself and, secondly, because such projects were meant to be high-priced projects,” he said.

“We did not experience an acceleration of housing prices, but rather a focus in the developing of high-end projects.”

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The post Savvy home buyers are turning to auctions in high-end market appeared first on Asian Correspondent.

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