The number and proportion of properties put up for mortgagee sale in Singapore by auction has increased since 2012. Of the 256 properties placed under the hammer in 1H 2014, 64 were put up by mortgagees, up from the 24 posted during the market boom in 2012, according to Colliers International.
Colliers attributed the increase to the tepid activity level in the residential property resale market, which has been affected by the consecutive rounds of property cooling measures.
Notably, borrowers who default on their loan obligations are struggling to find a buyer on their own in the resale market as buyers are faced with the twin hurdles of loan restrictions due to the Total Debt Servicing Ratio (TDSR) and the Additional Buyer’s Stamp Duty (ABSD) for their second and subsequent property purchases.
“In addition to the punitive taxes and tightened loan rules that have resulted in a shrunken pool of potential buyers, buying interest has been further diluted by the diversion to new projects in the market,” said Grace Ng, Deputy Managing Director of Colliers International.
Moreover, the increasing number of properties put up for mortgagee sale could also be due to the growing number of bankruptcies, as data from Insolvency and Public Trustee’s Office (IPTO) as of May 2014 shows a rising trend in the number of bankruptcies orders made.
“Nonetheless, the 64 mortgagee listings … is still much lower than the record high of 2,462 properties listed during the property market trough in 2004. It is also just a fraction of the 452 and 270 mortgagee listings put up during the 1998 Asian Financial Crisis and the 2008 Global Financial Crisis, respectively,” noted Ng.
Looking ahead, Ng expects the mortgagee sales – particularly for apartments and condominium units – to increase for the rest of the year, unless the government relaxes or removes the property curbs.
For the whole of 2014, Ng expects the sale value of Singapore auction market to come in at between $60 million and $70 million, down by around 24 to 35 percent from last year.
Image (by Muneerah Bee): Knight Frank property auction in May 2014
Muneerah Bee, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email muneerah@propertyguru.com.sg
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