The numbers of borrowers who have defaulted their housing loans are growing amidst falling residential prices and a weak rental market stemming from the government’s curbs.
In fact, 118 repossessed homes were auctioned by banks last year, about tenfold the figure seen for the whole of 2013, said Mok Sze Sze, Head of Auction and Sales at JLL.
Nevertheless, only a small percentage of Singaporeans are struggling to repay their housing loans. As of 30 September 2014, less than 1 percent of mortgages were overdue with their monthly instalments by over 30 days, based on a central bank report last December.
However, defaults in non-performing loans have edged up to 0.36 percent during the first three quarters of 2014 compared to 0.28 percent previously. The marginal gain is caused by delinquent borrowers who purchased luxury homes.
Colliers International’s Deputy Managing Director Grace Ng, said, “Some of the properties in the auction are those where the owner has multiple properties and he can’t rent them.”
Aside from the impact of the property cooling measures, the rental market is being squeezed by rising vacancy rates as more new properties enter the scene, while the influx of foreigners in Singapore slows.
In the last quarter, vacancy rates of private houses climbed to 7.8 percent, up from 6.2 percent in Q4 2013 and the highest level since Q4 2005, statistics from the Urban Redevelopment Authority (URA) reveal.
Furthermore, over 20,000 new homes are projected to come onstream this year and the same number in 2016, which are significantly higher than the 17,911 units in 2014.
With stringent loan rules remaining in place and residential prices continuing to soften, sales of repossessed homes are expected to increase by a third in 2015, added Mok from JLL.
Muneerah Bee, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email muneerah@propertyguru.com.sg
