UNDER THE HAMMER: Mortgagee sales may rise in 2H2019

By Bong Xin Ying

/ EdgeProp Singapore |

January 4, 2019 7:00 AM SGT

More owners are choosing to list their properties on the auction market this year. Including re-listings, the number of properties put up for sale at auctions totalled 1,087 this year (as at Nov 30). This was 35.4% higher than the figure in 2017. According to Colliers International, the figure is the highest recorded since 2008.

From Colliers’ data, the total number of mortgagee listings in 2018 increased to 472, up 27% from 373 in 2017, while the number of owners’ listings increased to 615 in 2018, up 43% from 430 in 2017 (see Chart 1). Owners’ sales, however, fell to 11 in 2018 (to end-November), from 12 transactions in 2017. Mortgagee sales declined to 23 transactions in 2018 (to end-November), from 36 in 2017.

Impact of cooling measures

As with the rest of the property market, demand in the auctions segment was dampened by the property cooling measures in July. This was especially so for one- and two-bedroom unit types, which many investors look out for, says Joy Tan, head of auction and sales at Edmund Tie and Co (ET&Co).

This particular group of investors has “channelled their interest to industrial and commercial properties instead”, says Tricia Song, head of research for Singapore at Colliers International. Consequently, the proportion of residential property listings has contracted, notes Song. In 2017, it was 54%. In 1H2018, the proportion of residential listings was 52%. However, following the property cooling measures, the proportion dropped to 47% (see Chart 2).

Interest in large three- and four-bedroom apartments priced below $2 million remains healthy, says ET&Co’s Tan. Such units appeal mainly to owner-occupiers.

Biggest transactions under the hammer

In the biggest transacted residential deal for the year (see table), a semi-detached house at 25 Pasir Ris Way in the eastern corner of Singapore was sold for $5 million ($505 psf) in May. With a land area of 3,999 sq ft and a built-up area of 9,892 sq ft, the unit attracted 15 bids. The mortgagee sale was brokered by ET&Co.

A semi-detached house at 25 Pasir Ris Way was sold for $5 million ($505 psf) in May (Credit: ET&Co)

The second-largest residential transaction was the sale of a duplex penthouse on the sixth- storey of The Berth by the Cove. The 2,938 sq ft, four-bedroom unit was sold for $3.25 million ($1,105 psf) at an auction conducted by ET&Co in February, and marked the first sale of a unit in Sentosa Cove at an auction this year. The previous owner had purchased it for $5.64 million ($1,919 psf) in 2011.

For price trends, recent transactions, other project info, check out the Semi-detached house in Pasir Ris Way and The Berth by The Cove project details page

Positive outlook for auction market

The property cooling measures in July had affected the resale market, which saw a significant drop in transactions in 2H2018. Sellers in the secondary market are expected to face greater difficulty in disposing their property as more buyers turn to new launches next year. Mok Sze Sze, JLL Singapore head of auction and sales, expects more owners to turn to the auction market to list their properties.

Mortgagee sales are also set to rise. “With the trade war and the current market sentiment, we foresee an increase in mortgagee sales of 10% to 15% in 2019 compared with this year,” adds Mok.

ET&CO’s Tan sees mortgagee sales being “muted” in 1H2019. With interest rates expected to rise in the middle of next year, she expects an increase in the number of mortgagee sale listings in 2H2019.

Colliers International director of capital markets and investment services, Steven Tan sees collective sale beneficiaries turning to the auction market to shop for a replacement home next year.

ET&Co’s Tan agrees. “Many en bloc beneficiaries see auctions as an opportunity to hunt for a good buy, especially mortgagee sales.”

Industrial and commercial listings are also expected to rise, and this will be particularly so “for strata shops that were built in the last five years and priced above $3,000 psf”, according to Sharon Lee, senior director and head of auction and sales at Knight Frank Singapore. “We can expect a positive outlook for the auction market,” she says.