Home prices to dip 10 to 20%: OCBC

Posted on 26 Jun 2014 | Comments Off on Home prices to dip 10 to 20%: OCBC

OCBC sees residential prices will dip ten to 20 percent over 2014 to 2015.

However, a price crash in excess of 20 percent is unlikely, even after accounting for the anticipated physical oversupply and interest rate uptrend ahead, according to a recent OCBC report.

“One key argument against a crash is that we believe there is a high price elasticity of demand in the market largely due to a prolonged period of physical undersupply from 2004 to 2012. Simply put, significantly more buyers will likely come into the market at lower price points, which will slow the rate of decline as prices soften,” the statement said.

Despite the strong sales recoded in May, the report pointed out the take-up rate of 82 percent in the month was lower on a month-on-month and year-on-year basis, as figures for April 2014 was at 125 percent while May 2013 stood at 97 percent.

Additionally, OCBC’s base case is that primary sales for the year will fall: “We forecast FY 14 primary private home sales to dip 33 percent to 10,000 units, and see prices in mass market segment to be more at risk versus the mid-tier and high end.”

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Mortgagee sale properties double in Q2

Posted on 25 Jun 2014 | Comments Off on Mortgagee sale properties double in Q2

In the current quarter, more properties which were repossessed from borrowers were put up for auction, said media reports.

According Colliers International, 42 foreclosed properties went under the hammer in Q2 2014, up from 22 in the first quarter and just six a year ago.

This figure is also expected to increase further due to the growing supply of non-landed private homes, which will make it difficult for borrowers to sell their properties by themselves, resulting in mortgagee sales.

The lower number of expatriates coming here is also affecting rental incomes and borrowers’ ability to repay their loans.

The mortgagee sale in Q2 2014 is the highest since the third quarter of 2009, when 63 properties were put up for auction. The 64 properties sold in the first half of the year also exceed the total tally in 2012, when 24 properties were disposed in this manner.

In comparison, the number of properties auctioned off by owners fell to 192 in first half of the year versus 226 in H1 2013.

Consequently, the share of mortgagee sales climbed to 25 percent in H1 2014 from 6.6 percent for the whole of 2013.

The mortgagee sales’ share also doubled to 33.9 percent in Q2 2014 from 16.7 percent in the previous quarter. This is also largest percentage since Q1 2008, when mortgagee sales accounted for 35.5 percent of the transactions.

Colliers’ data was based on the sales lists of major auction houses as of 19 June.

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