News: Auction success rate drops despite hike in mortgagee sale listings

May 8, 2020

Singapore saw total auction listings decline 31.1% year-on-year to 235 in the first quarter of 2020, revealed an Edmund Tie report.

However, mortgagee sales slightly increased by 2.6% year-on-year to 160 listings.

And much like in 2019, the proportion of mortgagee sales significantly increased to 68% in Q1 2020 from 46% in Q1 2019.

Residential properties accounted for 51% of mortgagee listings in Q1 2020, industrial properties 31% and retail properties 15%. Office properties only made up 1% of mortgagee listings.

“The higher proportion of mortgagee sale listings came amid an already gloomy economic outlook made worse by the onset of the COVID-19 pandemic, which resulted in owners defaulting on mortgage payments,” said the report.

Despite the increase in listings, the auction success rate declined to 1.6% in 2019 from 3.8% in 2018, reflecting a more cautious sentiment in the buyers’ market.

Given the financial burden brought by the Covid-19 pandemic on individuals, the Monetary Authority of Singapore (MAS) extended a helping hand to beleaguered homeowners.

On 31 March, MAS announced a deferment on principal payment or both interest and principal payments for cash-strapped residential property owners with housing loans up to 31 December 2020.

Most financial institutions also offered payment deferments to individuals with industrial and commercial property loans.

These borrowers were not also subjected to the Total Debt Servicing Ratio (TDSR).

Moreover, the COVID-19 (Temporary Measures) Act 2020, which took effect on 8 April, was enacted to ensure that landlords fully pass on property tax rebates to their tenants.

While these government measures are expected to ease some financial pressure off businesses and individuals, tempering a possible spike in mortgagee sale listings, Edmund Tie still expects mortgagee sales listings to increase once the measures are removed.

For the rest of 2020 and even into early 2021, Joy Tan, Head of Auction and Sales at Edmund Tie, expects mortgagee sale outlook to follow a tick-shaped recovery, popularly known as the Nike swoosh.

“The drop is expected to be rather gentle, given the three packages implemented by the government. As a result, homeowners would not be anxious to liquidate their assets at a lower price as the packages will tide most of them over this crisis,” she said.

“This ‘Nike Swoosh’ scenario also allows for limits set by the government to be eased gradually. Furthermore, prospects will remain cautious with taking long-term loans and would choose to adopt a wait-and-see approach. Hence, the upturn in mortgagee sales will follow a slightly gentler curve stretching into early 2021 before reaching pre-coronavirus levels.”

Looking for a property in Singapore? Visit PropertyGuru’s ListingsProject Reviews and Guides.

Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg

spacer
agent image
agency logo
Chernys Lim
Senior Marketing Director
ERA REALTY NETWORK PTE LTD
limchernys@gmail.com
CEA Licence No.:
L3002382K / R056864G
+(65) 8388 7881