Properties for auction are seeing few takers even after price cuts by vendors, as buyers hold out for further drops.

According to Knight Frank, out of 198 properties put on the block by the five main auction houses between July and September this year, only 14 properties were sold during their first time on the podium.

Last month, there were no takers at the two auctions held, one by Knight Frank and the other by Jones Lang LaSalle. The results are abysmal in comparison to 2006 and 2007 where many properties were sold on the first time they were auctioned.

Knight Frank’s executive director for auctions, Mary Sai noted that the current market is essentially a buyer’s market, as sentiment is very sluggish in view of the global financial turmoil.

Auctioneers say that the slowdown started early this year, with the auction market being generally quiet since the beginning of 2008, prompting buyers to adopt a wait-and-see attitude. Buyers are waiting for prices to fall, even though asking prices have already dipped as much as 20 per cent in some cases.

According to Sai, vendors are generally more realistic in their pricing now as property values have declined in the past few months due to bad news on the economy, inflation and sub-prime woes.

DTZ’s senior director for investment advisory services and auction, Shaun Poh, said properties from various sectors are being put up for auction and vendors are hoping to make a slight profit or break even. Even so, transaction volumes are low, although property firms are still getting enquiries.

Colliers’ deputy managing director for agency and business services, Grace Ng said that demand from investors is weak, but there continues to be some interest in value buys, well-located properties and the right price as investors are very price-sensitive.

Meanwhile, demand from owner-occupiers seem slightly better with Colliers seeing good interest in mass-market private homes from upgraders and for landed properties such as terraced houses.

Auctioneers report zero fire sales to date. However, fire sales from owners who need to unload properties and cut losses before banks step in to foreclose are likely, said Sai. There will also be more mortgagee sales as borrowers default on loan payments.

According to Ng, demand will come from owner occupiers and investors are likely to take advantage of the current market condition and offer prices below market valuation.