The Singapore property auction market saw a total of 378 auction listings in the first half of this year. This is 38.5 per cent higher than the 273 listings in 2H 2014.
Of the 378 properties, 105 were mortgagee listings – an increase of 10.5 per cent from the 95 listings in 2H 2014. There was no spike in the number of mortgagee listings, as employment figures remained high, and owners are able to continue servicing their mortgage loans; this is in spite of an impending increase in interest rate and an upcoming over-supply of residential homes.
Residential homes accounted for the lion’s share at 79.1 per cent of the mortgagee listings in 1H 2015. Among them was a Good Class Bungalow site at Binjai Rise; this was the first time after 8 years since 2007 that such property type was put up for auction sale by the bank.
A further breakdown reflected that only 14.3 per cent of the mortgagee listings were landed houses, while the bulk, or 64.8 per cent, were non-landed residential homes.
It has been observed that there is an increasing trend of large apartments with unit floor area of more than 1,500 sq ft being put up by mortgagees for auction sale.
Examples of apartments with floor areas larger than 1,500 sq ft that were put up by mortgagees in 1H 2015 include:
- Residences at Killiney in District 9 (5,059 sq ft)
- Seascape @ Sentosa Cove in District 4 (4,133 sq ft)
- Eastwood Centre in District 16 (3,025 sq ft)
- Stevens Court in District 10 (2,863 sq ft)
- Esterina along District 15 (2,540 sq ft)
- Bluewaters 2 in District 17 (2,755 sq ft)
- The Grange in District 10 (2,303 sq ft)
Ms Grace Ng (黄黎明), Deputy Managing Director of Colliers International, says, “Owners of large apartments are finding it challenging to sell them, as the large unit floor area translates into a higher price quantum. Some of these larger units are two-storey penthouses with large open terraces or balconies and a private swimming pool.”
She continues, “These sizable non-landed homes, which were popular during the market boom in 2007/2008, are now languishing in demand – suffering from a wane in both foreign and local buying interest due to affordability concerns that followed stringent loan curbs.
Furthermore, with the decrease in the housing budget among expatriates, owners are also finding it challenging to secure tenants, which resulted in difficulties to service the mortgage loan for their homes.”
The cooling measures and loan curbs in the property market, increasing interest rates and a mounting supply of residential units have made it difficult for owners to dispose their properties. At the same time, investors also found it challenging in leasing their properties, on the back of the competitive supply of completed homes for rent.
As of 1Q 2015, another 18,437 non-landed private residential properties are due for completion by end 2015, followed by a fresh supply of some 20,317 non-landed private homes in 2016.
In addition to a growing number of large-sized residential apartments, there is also an increasing number of strata-titled industrial properties put up as mortgagee sales. A total of 15 strata industrial units were put up in 1H 2015 by mortgagees, which is more than double the 6 listings in 2H 2014.
The 15 strata-titled industrial properties included units from UB One, Entrepreneur Business Centre, Empire Techno Centre and Paya Ubi Industrial Park – all of which are located in the Kaki Bukit/Ubi vicinity; as well as from Pantech Business Hub and Penjuru Tech Hub in the West.
Ms Ng adds, “Strata industrial property owners, who are in default, face stiff competition for tenants, owing to the abundant supply of strata-titled industrial units in the market. What is more, the lull in the industrial property sector is worsened by the government loan curbs.”
A total of 17 properties were sold at auction in 1H 2015, which raked in a total of S$45.14 million.
On the back of continued affordability concerns, properties with price tags in the region of S$1.5 million or lower are more popular among buyers; and this was particularly the case in 2Q 2015.
For instance, residential units at Golden Mile Complex and The Plaza (both in Beach Road) were sold for S$1.4 million and S$700,000, respectively, while another unit at Eastgrove (East Coast Road) was hammered down at S$950,000. A strata-titled factory unit at Empire Technocentre (Kaki Bukit Road) was sold for S$800,000.
There was only 1 high-value sale at auction in 1H 2015 – a row of shophouses at Teck Chye Terrace in Upper Serangoon Road, which was sold for S$14.63 million. Additionally, a fish farm at Sungei Tengah (Choa Chu Kang) was sold for S$2.5 million.
Ms Ng says, “This year, the auction rooms continued to be jam-packed, with some sessions seeing an overwhelming attendance of more than 200 people. Nonetheless, the sales figures at auctions remained moderated, as interested buyers prefer to go for private negotiation after the auction.”
Looking ahead, the current observations of an increasing number of mortgagee listings – in particular, large apartments of more than 1,500 sq ft and strata-titled industrial units – will continue.
Ms Ng says, “Buying interest for properties put up for auction sale is expected to remain high. This will be especially so for non-landed homes in the prime residential districts of 9, 10 and 11, where prices have shown relatively steeper correction in the last 2 years.”
On the back of government cooling measures, loan curbs and impending rising interest rates, the pool of potential buyers will shrink; hence, it is expected that affordable properties priced S$1.5 million and below will continue to be popular.
Ms Ng concludes, “The total sale value for 2H 2015 is expected to be in the range of S$30-35 million. This will bring the total sale value for the entire year to be about S$80 million, slightly higher than the S$72.5 million recorded in 2014.”