The number of properties put up for mortgagee sale increased to 22 in the first quarter of 2014; a relatively high figure for a three-month period, according to a Colliers International report.
There was only an average of eight mortgagee listings per quarter in 2013 and an average of six per quarter the year before.
The aforementioned 22 properties, which consists of a mix of different property types, also marked the highest quarterly number of mortgagee sales put up for auction since Q4 2010 and is possibly due to a quieter secondary residential market.
Grace Ng, Deputy Managing Director of Colliers International, said: “The pool of potential buyers in the resale market has shrunk, making it challenging for owners to dispose their properties in the secondary market when they default on their mortgage payments.”
Ng also noted that there is reportedly an increase in the number of bankruptcies, and this is a different situation from 2011 and 2012 when the robust property market was boosted by a low interest rate and high liquidity environment. She said, “Borrowers who were in default of their loan payments could easily sell their properties in the open market on their own.”
Meanwhile, sales in the secondary residential market have been falling since 2010. Only 7,680 private homes were sold in the resale market last year, while 15,676 units were transacted in 2012 and 16,736 in 2011.
As a result of the Total Debt Servicing Ratio (TDSR) measure, potential buyers may also face difficulty in securing loans, especially for higher-priced properties.
The impact of the multiple rounds of cooling measures is most felt in the high-end residential sector. The report revealed that five high-end homes were put up for mortgagee sale in Q1 2014, compared to six such properties for the whole of 2013.
Ng noted, “Foreigners, who traditionally formed a large demand base for high-end properties, bore the brunt of the Additional Buyers’ Stamp Duty, resulting in a substantial wane in buying interest. Consequently, owners are finding it increasingly demanding nowadays to find a buyer.”
In addition, two semi-detached houses were put up for mortgagee sale in Q1, which is the same number put up by banks for the entire 2013.
A total of 132 properties were put up for sale at auctions in the first quarter, a 10 percent rise from the 120 properties recorded in the last quarter of 2013.
Of that number, 110 were put up for auction by owners. Due to the lack of activity in the resale market, many chose the auction process to indicate their serious intention to sell.
Six properties were sold in the first quarter, which generated a total sales value of $17.87 million. Four of those, a shop unit and three residential units, were forced sale/mortgagee listings. Wilkie Apartment, The Anchorage and Draycott 8 were knocked down at $1.46 million, $1.1 million and $5 million respectively.
Considering the current state of the property market, the number of properties put up for mortgagee sale is expected to continue rising, particularly in the luxury residential and retail sectors.
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Originally Posted by oops
