Landed properties on mortgage sales 6%-9% cheaper than market

By Tan Chee Yuen / DTZ, The Edge Property | August 21, 2015 5:57 PM SGT
Prices of the auctioned landed properties under mortgagee sale were 6% to 9% lower when compared to recent transactions in the same postal sector with similar site areas, according to DTZ.
A case in point is the freehold semi-detached house at 2 Faber Walk with a site area of 7,333 sq ft. It will be put on auction on August 25. Ms Joy Tan, DTZ’s Head of Auction, says the indicative value for the property is in the range of $8 million. This translates to about $1,090 psf of its site area.
Based on URA’s caveats, there were only 12 transactions of landed properties larger than 7,000 sq ft in Clementi Planning Area from 2011 to date. The last landed property transacted with similar land area in Clementi was a detached house that was sold on 11 Feb 2014 for $12.3m or $1,509 psf of site area.
Properties put up for auction climbed 27% from 114 in 2H2014 to 145 in 1H2015, according to DTZ. However, the success rate has declined. Of the 145 properties, 19 were successfully auctioned for a total of $53.4 million in 1H2015. On the other hand, 20 of the 114 properties put up for auction was successfully sold in 2H2014 for a total of $43.6m. The property consultancy defines successful sales as properties sold just before, during or after the auction.
While there were more residential homes put up for auction in 1H2015 compared with 2H2014, those put up for auction under mortgagee sales remained unchanged at 32 units. Of the 32 units, 14 were successfully sold.
In the landed home segment, two of the six properties put up for auction under mortgagee sale were successfully sold in H12015. Both were located at Eng Kong Drive. The larger property, which has a site area of 3,936 sq ft, went under the hammer for $3,300,000 or $838 psf on land area. The other property, with a site area of 1,907 sq ft, was auctioned for $2.42m or $1,269 psf on land area.
Dr Lee Nai Jia, DTZ’s Regional Head of Southeast Asia Research, commented, “The current market conditions offer prospective buyers the opportunity to purchase good quality landed properties at a discount because the banks are more likely to exercise flexibility if there is urgent need. Notwithstanding, the banks have to serve due diligence to sell the properties at prevailing market values if possible.”