Number of mortgagee sales at 12-year low

MANY expected to see a surge in the number of home loan defaults, what with the worst recession in Singapore’s history and the rising tide of jobless people struggling with mortgage instalments.

Nothing, it turns out, could be further from the truth. The number of properties put up for mortgagee sale fell to a 12-year low this year, said a report by Colliers International yesterday.

Only 195 of the 927 properties put up for auction this year were mortgagee sales or forced sales of repossessed properties. This is a 25 per cent drop from the 260 properties last year, it said.

When banks repossess properties where the homebuyer has defaulted, they invariably choose to sell at auction as that is a fast and transparent mode of sale.

The latest low figures are a far cry from the situation in 1998 when the Asian financial crisis hit home. A total of 452 properties were put up for mortgagee sale that year, it said.

‘The low number of mortgagee sales could be due to the introduction of the Government’s Jobs Credit scheme which stabilised the employment market; which, in turn, provided some home owners with the ability to service their monthly mortgage loans,’ said the firm’s deputy managing director (agency and business services) Grace Ng.

‘Additionally, buoyant sales experienced in the primary market and a steadily improving economy boosted sentiments in the secondary market, hence enabling owners to dispose of their properties and evading the need for banks to foreclose their properties.’

The Colliers report said that 118 properties worth $168.39 million were auctioned off this year, slightly more than double the $83.67 million done last year.

Residential sales at auction this year totalled $88.35 million, up from $25.23 million last year, as upgraders were encouraged by the more positive economic sentiments since March as well as low housing loan rates.

This year, there was competitive bidding for old semi-detached houses with large land areas, noted Ms Ng.

The residential sector was the star performer as usual, but the value of non-residential properties auctioned off this year has more than trebled to $101.8 million to date, said another consultancy Jones Lang LaSalle in a statement yesterday.

Its head of auctions Mok Sze Sze said this can be attributed to the fact that investors are attracted to the higher rental yield from non-residential properties as opposed to a residential one.

Looking ahead, Ms Ng said more high-value properties are expected to be sold next year, possibly bringing the total value of properties sold at auction to more than $200 million.

Source: Straits Times, 18 Dec 2009