More house auctions but less sales
Avia Collinder, Business Reporter
Local real-estate experts indicate that while more residential properties are being placed on the auction block this year, less homes are being sold.
Connell Steer, chartered valuation surveyor and partner at the Kingston-based real-estate firm, Allison Pitter and Company Limited, told Sunday Business he believes the number of such residential properties on the market are 50 per cent higher than "this time last year" as banks move to keep non-performing loans at a low level.
"Properties span the entire gamut, from low income to high end. The numbers are more than 50 per cent up. The banks are becoming more proactive. They are not allowing their loans to go sour again," Steer said.
However, he said there were less serious offers and confirmation of sales compared with previous years.
"The number (of houses up for auction) is up significantly, but sales are down," he said. "If we were selling two per month before, we are now selling one per month. Those who have money want a bargain and there are not a lot of bargains available," he added.
The National Housing Trust (NHT) indicates that reserved prices for properties being auctioned does not mean buyers interested in purchasing cannot make offers below those levels.
"The NHT tries to secure the best value for properties sold at auction. There is a reserved price, but the final selling price is determined during the auction process. This selling price could be more or less than the market value of the property," the NHT said in answers to questions posed by Sunday Business provided by its communications department.
Sales have slowed in the last two years, with seven homes sold to date by auction this year and nine for all of 2012. In 2011, 41 were sold by auction.
An auctioneer at one of Kingston's larger auction houses who did not want to be named, said that "most homes are being sold for the forced-sale value. That is what I am seeing." The forced-sale value is 80 per cent of market price.
In July, the NHT reported that it had delinquents across all income brackets and in all parishes. Its delinquent accounts now stand at an estimated 16.7 per cent of total loans as at June 2013. Arrears at June 2013 were J$1.05 billion compared to J$784 million at June 2012, and J$718 million at June 2011.
Edwin Wint, president and CEO of La Maison Property Services Limited in St Andrew, notes that not all properties will sell at auction, adding that in general, private treaties as a means of sale is doing better.
"Attraction lies in location. Even Portmore is doing well. Outside of that, the average property does not do well. Portmore is attractive for affordability and also seen as an acceptable residential location," Wint said.
In general, he added, "it's also (about) supply and demand. There are some areas with nothing available (for sale and so) when it comes to auction people will take them."
While the NHT offers mortgagors in trouble the opportunity to restructure their loans, if that option fails, properties are first sent to auction and if they are not sold, offer them for sale by private treaty.
Steer noted that vendors, including the NHT, are not likely to divert to any great extent from the reserved price. He said however, that "if a property is difficult to sell, they will negotiate." Bargaining, he said, is less likely at the auction, but there is a possibility of getting deals when the selling institution invites offers by private treaty.
He said Portmore houses are among the most saleable by auction because, based on the price range, it is relatively easy for two or three persons to combine NHT loans to buy a property.