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30-12-14, 17:16
http://www.straitstimes.com/archive/wednesday/premium/money/story/mortgagee-sales-surge-amid-weak-leasing-market-20141224
Mortgagee sales surge amid weak leasing market
Published on Dec 24, 2014 1:05 AM
By Rennie Whang
THE number of mortgagee sale listings shot up this year in the wake of the lacklustre leasing market.
There have been 150 listings of mortgagee sales this year, up from just 32 last year.
The increase is being blamed on the weak leasing market, which has made it harder for borrowers to finance their mortgages, said Ms Mok Sze Sze, head of auction and sales at JLL.
Century 21 chief executive officer Ku Swee Yong added that investors may also be choosing to walk away from their loans amid poor rental demand.
In another sign of the distressed market, mortgagee sales listings comprised an average of 39 per cent of all residential auction listings this year - up from only 6 per cent last year - and is the highest in at least five years, said Ms Mok.
The proportion of mortgagee sales listings was at 19 per cent in the first quarter, 53 per cent in the third quarter and 46 per cent in this three-month period.
"In 2015, the auction market is likely to see more sales listings put up by mortgagees, with a moderate increase (from this year)," said Ms Mok.
Most of the listings are expected to be non-landed homes in prime areas and landed homes in the suburbs.
Ms Mok also noted that the value of auction sales has dropped this year.
The total value of auctioned properties has hit $72.5 million so far this year, about 27 per cent down from $99.6 million recorded for all of last year.
The value of sales recorded in this quarter has been $13.7 million, 251 per cent ahead of the same period last year, but down 57 per cent from the third quarter.
The quarterly dip was mainly due to the large quantum in the third quarter, which had been boosted by two big-ticket transactions.
One was the sale of a freehold residential site off Brighton Crescent for $9.1 million in September.
Homes have been selling faster as well, with 90 per cent of properties going under the hammer this quarter able to find a buyer at the first auction.
That is up from 54 per cent in the second quarter and 80 per cent in the third.
This is due to compromises from buyers and sellers, said Ms Mok.
"Sellers are now more willing to lower price expectations in light of the weaker market conditions, whereas from the buyers' perspective, (factors like) the expected rise in interest rates in the immediate horizon could have encouraged these purchases," she added.
The pace of auction sales next year is expected to be similar to this year's, with prices tipped to decline slightly, Ms Mok said.
The softer leasing market has not appeared to deter buyers' investment sentiments.
Last year, 57 per cent of properties sold were on a vacant possession basis.
This year, it was 81 per cent.
"This shows that purchasers have taken the downside risks into account and that the potential gain from the investment outweighs the risks," said Ms Mok.
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Mortgagee sales surge amid weak leasing market
Published on Dec 24, 2014 1:05 AM
By Rennie Whang
THE number of mortgagee sale listings shot up this year in the wake of the lacklustre leasing market.
There have been 150 listings of mortgagee sales this year, up from just 32 last year.
The increase is being blamed on the weak leasing market, which has made it harder for borrowers to finance their mortgages, said Ms Mok Sze Sze, head of auction and sales at JLL.
Century 21 chief executive officer Ku Swee Yong added that investors may also be choosing to walk away from their loans amid poor rental demand.
In another sign of the distressed market, mortgagee sales listings comprised an average of 39 per cent of all residential auction listings this year - up from only 6 per cent last year - and is the highest in at least five years, said Ms Mok.
The proportion of mortgagee sales listings was at 19 per cent in the first quarter, 53 per cent in the third quarter and 46 per cent in this three-month period.
"In 2015, the auction market is likely to see more sales listings put up by mortgagees, with a moderate increase (from this year)," said Ms Mok.
Most of the listings are expected to be non-landed homes in prime areas and landed homes in the suburbs.
Ms Mok also noted that the value of auction sales has dropped this year.
The total value of auctioned properties has hit $72.5 million so far this year, about 27 per cent down from $99.6 million recorded for all of last year.
The value of sales recorded in this quarter has been $13.7 million, 251 per cent ahead of the same period last year, but down 57 per cent from the third quarter.
The quarterly dip was mainly due to the large quantum in the third quarter, which had been boosted by two big-ticket transactions.
One was the sale of a freehold residential site off Brighton Crescent for $9.1 million in September.
Homes have been selling faster as well, with 90 per cent of properties going under the hammer this quarter able to find a buyer at the first auction.
That is up from 54 per cent in the second quarter and 80 per cent in the third.
This is due to compromises from buyers and sellers, said Ms Mok.
"Sellers are now more willing to lower price expectations in light of the weaker market conditions, whereas from the buyers' perspective, (factors like) the expected rise in interest rates in the immediate horizon could have encouraged these purchases," she added.
The pace of auction sales next year is expected to be similar to this year's, with prices tipped to decline slightly, Ms Mok said.
The softer leasing market has not appeared to deter buyers' investment sentiments.
Last year, 57 per cent of properties sold were on a vacant possession basis.
This year, it was 81 per cent.
"This shows that purchasers have taken the downside risks into account and that the potential gain from the investment outweighs the risks," said Ms Mok.
[email protected]