Mortgagee sales volume at 12-year low

Mortgagee sales volume at 12-year low
Dec 21, 2009 - PropertyGuru.com.sg

Many are expecting to see a surge in the volume of home loan defaults, with the worst recession in the history of Singapore and the growing tide of unemployed people who struggle with mortgage installments.

It turns out that nothing could be further from the truth. The volume of properties up for mortgagee sales dropped to a 12-year low in 2009, according to the report from Colliers International.

Of the 927 properties up for auction in 2009, only 195 were forced sales of repossessed properties or mortgagee sales. It said that the figure is 25 percent lower than the 260 properties in 2008.

When banks repossess properties defaulted by homebuyers, they constantly prefer to sell at an auction as it is a transparent and fast mode of sale.

The recent low figures are far different from the situation in 1998, when the Asian financial turmoil hit home. A total of 452 properties were put up that year for mortgagee sale, it said.

“The low number of mortgagee sales could be due to the introduction of the Government's Jobs Credit scheme which stabilized the employment market; which, in turn, provided some home owners with the ability to service their monthly mortgage loans,” said Grace Ng, deputy managing director (agency and business services) of the firm.

“Additionally, buoyant sales experienced in the primary market and a steadily improving economy boosted sentiments in the secondary market, hence enabling owners to dispose of their properties and evading the need for banks to foreclose their properties.”

Based on the Colliers report, 118 properties amounting to $168.39 million were auctioned off in 2009, a little more than double the $83.67 million generated in 2008.

This year, residential sales at auctions totaled to $88.35 million, up from last year’s $25.23 million, as the low housing loan rates and more positive economic sentiments motivated the upgraders.

Ms. Ng also noted that there was competitive bidding this year for old semi-detached houses with big land areas.