Mortgagee sale of larger homes are on the rise, a consequence of stringent lending conditions, higher interest rates and a slumping leasing market.
Though the pool of such buyers of prime properties may be small, strapped owners are often left with no choice but to let the banks step in and put the homes up for sale.
99 homes were put up for mortgagee sale in the first seven months of the year, up from the 51 in the same period in 2014 and 11 in 2013, according to an international property consultancy data.
18 landed homes went under the hammer in the seven months to July 31 this year, up from 10 in 2014 and seven in 2013.
Most of the landed properties under auction sit on larger sites, like corner terrace, semi-detached or detached houses.
These property auctions are a result of:
Difficulties in loan servicing;
Difficulties in selling due to higher price tags that come with these larger landed homes;
Loan constraints inflicted by property cooling measures;
Additional Buyers' Stamp Duty;
Closure to foreigners.
Conditional approval by Land Dealing Unit for permanent residents.
A good class bungalow (GCB) in Binjai Rise and a detached house in One Tree Hill went under the hammer in mortgagee sales in the seven months to July 31. No caveat were lodged for the bungalow, but the house in One Tree Hill sold for $9.38 million in June.
An increasing number of apartments listed for mortgagee sale this year have been large, with floor areas of over 1,500 sq ft.
Sizeable non-landed homes, popular during the market boom in 2007 and 2008, are now languishing away - suffering from a wane in demand by both foreign and local buying interest as a result of affordability concerns from the stringent loan curbs.
Additionally, owners face difficulties finding tenants for these large units because of reduced housing budgets for expatriates.
A 4,133 sq ft duplex penthouse at the Seascape in Sentosa Cove and a 1,873 sq ft Orchard Scotts unit were put up for auction.
The Seascape unit sold for about $5.8 million in May, at a $5.2 million loss.
The Orchard unit sold for $2.8 million in June, at a loss of about $824,000.
Large apartments attract more owner-occupiers at auction. Smaller units appeal better to investors, treading warily in a softening rental market.
Four-bedroom apartments in central locations are popular with owner-occupiers. They cost more and the buyers-pool is relatively small.
19 properties with a total value of $35.3 million were sold overall via mortgagee sale in the first seven months of the year, up from 12 homes valued at $15.7 million in 2014 and five properties worth $7.7 million in 2013.
Source: Straits Times