Panic selling alert: Mortgagee sales increase 75% in 1H14

Blame tepid activity in the resale market.

Sales in the mortgage market are expected to continue increasing in the next two quarters, unless government curbs on the market are relaxed or removed, according to Colliers International deputy managing director Grace Ng.

256 properties were put up for auction sale in 1H14, of which 64 were listed by mortgagees. According to Colliers, the increase could be attributed to lacklustre activity level in the residential property resale market, which has been hit by consecutive rounds of government cooling measures.

Colliers adds that borrowers who default on their loans have been finding it increasingly difficult to find a buyer on their own in the resale market, as buyers are faced the twin hurdles of Additional Buyer’s Stamp Duty for their second and subsequent property purchases, and loan restrictions due to the Total Debt Servicing Ratio.

The rising number of properties put up for mortgagee sale could also be attributed to the increase in the number of bankruptcies.

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On the other hand, in light of the continued softening of residential home prices QoQ since 4Q 2013, buyers are expected to continue adopting a wait-and-see approach, committing only if they perceive a bargain. Additionally, the impending interest rate increase, which is expected to set in as early as 2015, will also keep buyers on their toes.”
Ms Ng concludes, “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.”