Thursday 08 Jun 2023
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MORE THAN 40% of low and low-medium-cost homes that are put up for auction annually in Penang do not get sold due to the state’s stringent criteria for first-time homebuyers, says Penang Auctioneers Association chairman Stephen Soon.

He says a proposal to lift or relax the criteria will be submitted to the state government in two months’ time.

“When an interested bidder fails to fulfil the criteria, the property cannot be sold to him. And every time the unit is not sold, the reserve price determined by market forces drops 10%. When that happens repeatedly, the bank will not be able to recover the loan … plus there is compound interest. This will eventually cause the owner to go bankrupt.

“We have met State Executive Councillor for Housing and Town and Country Planning Jagdeep Singh Deo on the matter. He advised us to submit a proposal,” he says on the sidelines of a public talk at the Penang International Property Expo 2015.

According to the state’s first-time homebuyer eligibility guidelines, an applicant for a low or low-medium-cost unit costing between RM42,500 and RM200,000 must have a household income of between RM2,500 and RM6,000.

Soon says 400 to 500 properties — land parcels and commercial and residential units — are auctioned every year, and most of the low and low-medium-cost units costing between RM6,000 and RM70,000 are located on the mainland.

“From my observation, of the 164 properties put up for the upcoming auction, 46% or 76 units are low or low-medium-cost units. The total reserve price is RM3.62 million. The lowest reserve price is RM11,000, while the highest is RM170,000,” he says.

Soon points out that these units, whether landed properties or apartments, are located in the northern region of Seberang Prai, Bukit Mertajam and Nibong Tebal.

He says unlike other states that allow anyone to bid for low and low-medium-cost homes, Penang is strict with its policy, and approval has to be sought from the authorities before a foreclosure.

“The state requires that the units that are to be auctioned be sold to those on the waiting list for such homes. At times, these properties have very low reserve prices because they have been put up for auction several times,” he says.

“We must remember that 10% is knocked off the reserve price each time they are not sold,” he says, adding that the original house owner, who is the borrower, suffers the most when the property is not auctioned off.

“In fact, the banks also do not like to auction off properties because they will incur costs when they are not sold. It is worse when the reserve prices fall.”

According to Soon, who earlier gave a talk on property auctions at the Penang Property Summit 2015, there is a large number of affordable homes available in the state, but people are not aware of them. He cites an example of a 700 sq ft unit with three bedrooms in Paya Terubong, which has a reserve price of RM45,000.

However, he says, most first-time homebuyers are keen on new units despite the long waiting period.

He advises bidders not to be too concerned about the appearance of the units going under the hammer because they can be cleaned and refurbished.

Meanwhile, an antique coin and banknote auction held in conjunction with the summit saw 40% successful bids amounting to RM73,000.

Soon says this auction, which featured 110 lots of antique items, including 60 lots of banknotes, had a total value of about RM80,000. “We were commissioned by the Malaysian Numismatic Society to auction the items at the property fair. The reserve prices of the coins and banknotes were determined by the society’s experts.

“The auction was aimed at attracting quality buyers who would also visit the property booths.”

Among the bidders was first-time auction participant Amarjit Singh Sandhu, 34, who paid RM11,000 for 15 lots, including RM3,400 for a Malaysian $100 coin minted in 1971.

“I have never taken part in an auction before. It was a very exciting experience. I collect coins and banknotes, but none of them were bought at auctions,” says Amarjit, an estate agent, who drove from Muar, Johor, for the event.

Meanwhile, computer seller Tan Gim Aun, 52, paid RM2,400 above the reserve price of RM9,500 for 10 Malaysian $1 banknotes. Tan says he was determined to acquire the banknotes — a set with matching N/76 prefix, except N/52 777777 — after registering for the auction.

“I will keep the notes for a few years and then sell them. I have been a banknote collector for more than 30 years,” he says.

Soon says he is surprised that more banknotes than coins were successfully auctioned, although antique coins are usually more popular among collectors. “We also expected higher bids because we noticed a few avid collectors and dealers.”

Later, Soon conducted a charity auction of 47 items, including hotel stay and meal vouchers, electrical items and air tickets, raising RM9,200 for flood victims in the East Coast.


This article first appeared in City & Country, The Edge Malaysia Weekly, on January 19 - 25 , 2015.

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