Mortgagee sale listings tripled in 4Q2023 y-o-y, with more to emerge in 2024
By Timothy Tay
/ EdgeProp Singapore |
Condos in the Redhill and Alexandra areas. Despite the decline in overall sales value last year, the auction market managed an overall success rate of 6.7% with a total of 360 auction listings. (Picture: Samuel Isaac Chua/The Edge Singapore)
The Singapore property auction market ended the last quarter of 2023 with the number of mortgagee sale listings tripling compared to 4Q2022. According to a market report by Knight Frank Singapore, 31 mortgagee sale listings were on the market in 4Q2023.
The local auction market also ended the year with 24 properties sold under the hammer, raking in a total sales value of $34.8 million. The value of auction sales last year translates to a significant yearly decline of 61.4% compared to the sales value achieved in 2022, which recorded 40 properties sold under auction at a total sale value of $90.3 million.
Despite the decline in overall sales value last year, the auction market managed an overall success rate of 6.7% with a total of 360 auction listings. “The success rate of 6.7% in 2023 is typical for the auction market, considering the pre-pandemic range of 1% to 6% success rate recorded from 2015 to 2019,” says Sharon Lee, head of auction and sales and Knight Frank Singapore.
Separately, a market report published by Edmund Tie on Jan 29 noted that the proportion of owner listings has consistently exceeded mortgagee sale listings for the past three years. In 2021, 50% of auction listings were owners while 45% were mortgagees. However, in 2022 58% of listings were owners and 34% were mortgagees. Last year owner and mortgagee listings accounted for 65% and 30% respectively.
“Overall, there were fewer properties put up for auction in 2023, mainly due to both the healthy rental and resale markets. Correspondingly, owners could still service their loans in a timely manner despite the higher interest rate environment, and sellers were able to relinquish their properties quickly,” says Joy Tan, head of auction and sales at Edmund Tie.
She adds that banks are much more open to exploring alternative ways of selling mortgagee properties, including via private treaty, expression of interest or tender exercises to sell the properties quickly, especially for units of higher quantum value.
However, while most owners managed to hold on to their investment residential properties, a handful were also forced to dispose of assets, especially individuals who were stretched to their financial limits as rental incomes stagnated against elevated interest rates last year, says Lee.
A 1,948 sq ft unit in Sommerville Park at Farrer Drive was sold for $4.45 million in August last year. (Picture: The Edge Singapore)
Market data from Knight Frank indicates 68 residential mortgage listings in 2023, comprising 59 non-landed properties and nine landed properties. “Most of the non-landed listings sold were one to two-bedroom apartments located in the fringe and suburban regions, suggesting that private homes in these areas continued to offer a more palatable entry price,” says Lee.
In the luxury market, there were 11 mortgagee listings of prime Districts 9 and 10 residential properties last year. One such unit was a 1,948 sq ft, three-bedroom apartment at the freehold Sommerville Park on Farrer Drive in prime District 10. It was sold under the hammer for $4.45 million last August.
Other noteworthy auction sales last year included the sale of a 1,259 sq ft three-bedroom unit at Watertown in Punggol for $2.11 million in September, a 1,227 sq ft four-bedroom apartment at Tree House in Chestnut Avenue that transacted for $1.85 million in November and two industrial units (4,639 sq ft and 4,628 sq ft) at Enterprise Hub at Toh Guan that were sold for $1.09 million each in April.
A 1,259 sq ft unit in Watertown at Punggol was sold for $2.11 million last September. (Picture: Samuel Isaac Chua/The Edge Singapore)
“In the commercial and industrial sectors, the tight business environment might have proven too challenging for some business owners, resulting in the offloading of these assets to recoup some capital and to consider other enterprises to venture into,” says Lee.
Given the time lag for economic stress to be reflected in the property market and subsequently at auctions, Lee reckons “the poor business climate of 2023 is likely to be revealed in 2024 in the form of more mortgagee listings”.
Lee expects the commercial and industrial sectors to see more mortgagee listings this year, as investors dispose of underperforming assets and recycle their capital for alternative investments. She expects the auction market to close 2024 with a success rate of 3% to 5%. This is lower than the success rate of 6.7% in 2023.
Residential property owners could find it “more challenging” when seeking a tenant or disposing of their property this year compared to the past three years, Tan of Edmund Tie observes. She attributes this to the increase in the supply of private and public housing units and greater competition from other sellers with comparable properties on the market. “Consequently, the number of properties listed for auction would probably trend upwards,” she says.
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