Tag Archives: Mortgagee Sale

Mortgagee listings surge on the back of staff cuts

The economic slowdown and soft leasing market has led to staff cuts, which caused some affected homeowners to have difficulty financing their mortgages, revealed a DTZ Research report.

This has prompted new auction listings for mortgagee sales to soar 85 percent to 87 units in 2015 from 47 units in the year before, stated the report.

The number of auction listings for owners’ sale also surged to 135 properties last year from 77 properties in 2014.

“Given that properties that command higher price quantum tend to move slower in a quiet market, owners use auctions as an avenue to hasten disposal, so as to release their housing equity,” said DTZ.

Moreover, the report noted that more landed properties and large apartments were put up for auction in the year.

The number of landed properties listed for auction climbed to 53 units in 2015 from 39 units previously, while the number of apartments with a strata area above 2,000 sq ft rose from 17 units to 40.

DTZ expects more choice homes to enter the auction market, given the recent equity sell-off in response to signals of an economic slowdown in Japan and China.

“Sudden shocks in the equity markets tend to be a precursor for more auction listings, as owners need to adjust their financial position. This will offer prospective home buyers a window of opportunity to acquire homes at reasonable prices,” said Dr Lee Nai Jia, DTZ’s Head of SEA Research.

In fact, DTZ’s upcoming auction on 25 February will showcase several luxury homes, including a 4,219 sq ft cluster bungalow in District 21 and two adjacent penthouses in District 15.

Other listings include two split penthouses at the five-storey Veranda apartment development. Located along Lorong K Telok Kurau, just off East Coast Road, each unit has an indicative valuation of between $1.3 million and $1.6 million.

“Under current market conditions, it is difficult to acquire a good quality home through private treaty as the price gap between buyers and sellers tend to be wide due to mismatch of expectations. There are fewer good units available too as owners of such units will wait for the market to rebound first. Hence, auctions this year offer buyers a window of opportunity to seek choice homes at reasonable prices,” said Joy Tan, DTZ’s Head of Auction.

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Luxury homes face nearly $3m in losses in mortgagee sale

TWO luxury homes in Singapore are on the market at prices that would mean losses of nearly $3 million each as the local property market continues to weaken.

The mortgagee sale of the two units in Turquoise, a luxury Sentosa Cove condominium, at fire-sale prices comes amid signs that banks are forcing more cash-strapped owners to offload property to meet loan shortfalls.

The units, understood to belong to one owner, are on sale for about $1,600 per sq ft (psf) – an asking price of $4.5 million to $4.6 million apiece, which would mean losses of about $2.7 million each for the 2,777 sq ft units.

Caveats lodged with the Urban Redevelopment Authority showed that both apartments were bought in November 2007 at about $2,600 psf. Current market prices are $2,000 psf to $2,200 psf.

But the losses are still less than those suffered from the sale of two other 2,777 sq ft apartments in the project earlier.

These two apartments in the 91-unit project went under the hammer as distressed sales in July, and were sold for about $1,400 psf. At least one of the units was sold by DBS Bank, sources said.

The units had been bought in 2009 for about $2,550 psf but ended up suffering losses of up to $3.2 million.

Homes are put up for mortgagee sales when financial institutions try to recover their losses after a borrower defaults on a loan.

Experts say luxury homes are more likely to face forced sales, given the large sums involved and the fact that speculators may be involved.

Fewer suburban units are facing mortgagee sales, Colliers deputy managing director Grace Ng said last week.

The lower total price means the owners can pay their mortgage more easily and find buyers if they default, she added.

Mr Tan Tee Khoon, executive director of residential services at Knight Frank Singapore, said defaulting borrowers could have had difficulties selling their properties in the tepid secondary market, while an increased supply of new units in the prime districts means that it is harder to find a tenant.

“Sentosa’s exclusive location makes it less accessible than homes on the main island and harder to lease now,” he said.

“Also, borrowers who default are more likely to have been speculators.”

The property market has been buckling under the weight of cooling measures, with the luxury segment bearing the brunt of the slowdown on the back of dwindling demand and borrowing restrictions.

A total of 98 homes were put up for auction by mortgagees in the first 10 months of the year – far more than the 14 homes in the same period last year.

Housing loans for the third quarter came under close scrutiny as the three local banks released their financial scorecards last month.

DBS chief executive Piyush Gupta said the bank was not seeing any stress in its mortgage loan book. But United Overseas Bank and OCBC Bank posted higher non-performing loans from bad mortgages, attributing the rise to borrowers who bought luxury homes.

UOB disclosed only that the rise in bad home loans was mostly the result of mortgages at one luxury condominium, but Maybank Kim Eng analysts Ng Wee Siang and Ng Li Hiang noted in a report that it was “largely from one key project in Sentosa”.

Meanwhile, two units were put up for mortgagee sale at a Colliers auction last Friday. The three-bedders at The Laurels in Cairnhill had opening prices of $4.1 million and $3.6 million but were not sold.

The Straits Times understands that the units were put up for sale by UOB.