Mortgagee Auctions Listings In Singapore Stood At 31 In 4Q2023
The property auction market in Singapore ended the last quarter of 2023 with the number of mortgagee auction sale listings tripling compared to 4Q2022.
A mortgagee sale occurs when the bank forecloses on the property. Mortgagee sales occur when the owner of a property cannot service the home loan, and the bank forecloses on it. The bank typically engages the services of an auction house to sell the foreclosed property.
There were 24 properties sold in the local auction market in 2023 with a total sales value of S$34.8 million. The value of auction sales represents a significant decline of 61.4% compared to the sale value achieved in 2022, which recorded 40 properties sold under auction at a total value of S$90.3 million.
Success Rate Of Auction Listings In Singapore
Despite the decline in overall sales value last year, the auction market managed an overall success rate of 6.7% with a total of 360 auction listings. “The success rate of 6.7% in 2023 is typical for the auction market, considering the pre-pandemic range of 1% to 6% success rate recorded from 2015 to 2019,” says Sharon Lee, head of auction and sales at Knight Frank Singapore.
Owner Listings Exceed Mortgagee Auction Sale Listings
Separately, a market report published by Edmund Tie on 29 January 2024 noted that the proportion of owner listings has consistently exceeded mortgagee auction sale listings for the past three years. In 2021, 50% of auction listings were owners and 34% were mortgagees. Last year owner and mortgagee listings accounted for 65% and 30% respectively.
Overall, there were fewer properties put up for auction in 2023, mainly due to both the healthy rental and resale markets. Correspondingly, owners could still service their loans in a timely manner despite the higher interest rate environment and sellers were able to relinquish their properties quickly,” says Joy Tan, head of auction and sales at Edmund Tie.
She adds that banks are much more open to exploring alternative ways of selling mortgagee properties, including via private treaty, expression of interest or tender exercises to sell the properties quickly, especially for units of higher quantum value.
Mortgagee Auction Sale Listings Expected To Increase In 2024
Market data from Knight Frank indicates 68 mortgagee auction listings in 2023, comprising 59 non-landed properties and 9 landed properties. “Most of the non-landed listings sold were one to two-bedroom apartments located in the fringe and suburban regions, suggesting that private home prices in these areas continued to offer a more palatable entry price,” says Lee.
Given the time lag for economic stress to be reflected in the property market and subsequently at auctions, Lee reckons “the poor business climate of 2023 is likely to be revealed in 2024 in the form of more mortgagee sale listings”.
Lee expects the commercial and industrial sectors to see more mortgagee auction sale listings this year, as investors dispose of underperforming assets and recycle their capital for alternative investments. she expects the auction market to close 2024 with a success rate of 3% to 5%. This is lower than the success rate of 6.7% in 2023.
Residential property owners could find it “more challenging” when seeking a tenant or disposing of their property this year compared to the past 3 years., Tan of Edmund Tie observes. She attributes this to the increase in the supply of private and public housing units and greater competition from other sellers with comparable properties on the market. “Consequently, the number of properties listed for auction would probably trend upwards,” she says.
Source: EdgeProp
Please read more Property Insights here.