Mortgagee sales reach record highs in Q3

Sales value of sold mortgagee auctioned units spiked 743.7% YoY in Q3.

Despite the market's improving sentiment, the number of mortgagee listings in Singapore continued to reach record highs in Q3, Knight Frank revealed.

According to their study, the total number of properties put up for auction saw an increase of 14.8 % YoY to 209 units. Amongst these, 39.2% or 82 were unit sales.

A total of 18 properties were sold through an auction, turning the success rate to 8.6%. Out of the 18 properties, 12 were mortgagee sales, constituting of 10 residential properties, 1 industrial factory and 1 shophouse.

The number of mortgagee sales in Q3 was the highest since Q1 in 2011. They made up 65% of total sales value of auctioned properties in Q3, also the highest since Q1 in 2011.

Total sales value rose by 85.7% from $29.5m to $39.3m in Q3 2017. Transacted mortgagee sales hit a value of $25.5m.

"The number of properties to be put up for auction in Q4 2017 is likely to surpass that of Q4 2016, from 160 to 180 properties. This amid a steadily rising interest rate set against an uncertain global economic outlook that is largely influenced by a culmination of geopolitical risks and policy uncertainties, especially from major economies," Knight Frank said.

The residential sector witnessed the highest jump in sales value of sold mortgagee auctioned units with an astounding 743.7% YoY spike for Q3 2017.

Residential sales value on the upswing

The residential sector remained the major contributor of the total number of properties put up for auction. There were 106 residential units of 209 put up for sale, an 6% increase from 100 units in Q3.

Fifteen residential units went under the hammer in Q3 2017, translating to a one year high of $31.9m of sales, an 166.8% increase YoY from last year.

Three of these were landed properties, 12 were private condominiums.

With improved residential property sentiments, residential units put up for auction under Owner sales could see a decline in Q4 2017 and into 2018, Knight Frank said.

"More owners could hold on to the release of their properties in the open auction market, in anticipation of potentially higher residential prices due to rising land costs amidst record bid prices from collective sales and government land sales," they added.

Meanwhile, there were 49 industrial units were put up for auction within the quarter. However, sales success rate only hit a measly 2% as only one unit was sold.

The sale success rate stood lower than the 10-year QoQ moving average of three units.

The total auction sales value for the industrial sector hit only $0.44m, a 71.3% from last quarter.

Knight Frank expects the number of industrial properties up for auction to pick up in Q4.

However, market demand also remains stagnant due to continued pressures on property rental prices, barriers from intended purchases and rentals, and tighter monetary policies.

Knight Frank Singapore director and head of auction Sharon Lee said, "As the overall business outlook improves, interest to acquire or sell properties is envisaged to pick up. Some sellers could be more realistic in their price expectations and create purchasing opportunities. The auctions market serves as a good platform for buyers to source for properties such as factories, whether for investment or own use."