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Residential mortgage auction listings jump 61% in 2019

/ EdgeProp Singapore |

May 6, 2020 5:26 PM SGT

SINGAPORE (EDGEPROP) - There were 356 residential mortgage-sale property listings at auctions last year, up 61.1% from 2018, according to Edmund Tie. The 2019 number accounts for 27% of a total of 1,320 auction listings.

The consultancy says that residential properties bore the brunt of the macroeconomic headwinds caused by the Sino-US trade war, Brexit negotiations, and other global uncertainties. In terms of absolute numbers, residential properties were one of the most volatile compared to other property sectors.

“By and large, highly leveraged homeowners are grappling with higher risks, with the result that shocks and disruptions to income may lead to inability to continue servicing mortgage loans,” says Alice Tan, senior director of research and consulting at Edmund Tie.

She adds: “The outbreak of Covid-19 since late December last year added pressure to an already difficult environment that was barely recovering. Barring further government intervention, this is anticipated to further trigger mortgagee sales.”

In the first quarter of this year, the percentage of mortgagee sales relative to the total number of auction listings increased to 68%, compared to 46% in the same period last year.

In addition, while listings have increased, the auction success rate has declined, signalling a more cautious sentiment among buyers. The rate was 3.8% in 2018 but fell to 1.6% in 2019, with only 21 properties knocked down at auction.

On March 31, the Monetary Authority of Singapore announced a deferment on principal payment or both principal and interest payments for cash-strapped homeowners with residential property loans up to Dec 31, 2020.

In addition, the Covid-19 (Temporary Measures) Act 2020 passed in Parliament ensures that landlords pass on property tax rebates in full to their tenants.

Edmund Tie says that with such government measures in place, the pressure on individuals and businesses may ease.

Looking ahead, mortgagee sales will follow a “tick-shaped” recovery, says Joy Tan, head of auction and sales at Edmund Tie. She adds: “The drop is expected to be rather gentle, given the three packages implemented by the government. As a result, homeowners would not be anxious to liquidate their assets at a lower price as the packages will tide most of them over this crisis.”

Buyers will remain cautious in taking up long-term loans and will adopt a “wait-and-see” approach, says Tan. “The upturn in mortgage sales will follow a slightly gentler curve stretching into early 2021 before reaching pre-coronavirus levels.”

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