Going, going, gone: Number of homes auctioned off by bankrupt borrowers surged in 2014

Mortgagee sales have been on the uptrend since 2012.

Homeowners at risk of default are turning to banks auction houses in a desperate bid to sell their properties. According to Colliers International, a total of 98 residential properties were put up for auction by mortgagees in the period from January to October this year.

“A total of 131 properties were put up for auction sale by mortgagee this year from Jan to October. This is more than five times the 25 properties put up by mortgagee in the same period last year. In the residential segment, 98 residential properties were put up by mortgagees in the period from January to October 2014. This is seven times the 14 residential properties put up in the same period last year,” Colliers International Deputy Managing Director Grace Ng told SBR.

The spike could be blamed on Singapore’s stricter regulatory and financing environment. Apart from the higher stamp duties and tighter borrowing caps, buyers also remain cautious as the market is still plagued with oversupply concerns and an expected increase in interest rates.

“Previously, borrowers who were in default were able to sell the properties easily on their own in the open market due to the healthy property market. The increase in the number of bankruptcies, as shown by data from Insolvency and Public Trustee’s Office, could have also contributed to the increase in properties put up for mortgagee sale,” noted Ng.

In a previous report, Colliers has noted that the number and the proportion of properties put up for mortgagee sale has been on an uptrend since 2012.

“On the back of ongoing credit and budget constraints, properties that are priced around S$1.5 million and below will remain popular due to affordability concerns. The sale value for the Singapore auction market is likely to come in at between S$60 million and S$70 million for the whole of 2014, falling some 24-35 per cent from 2013’s auction sales receipt,” Ng concluded.