Mortgagee sales hit new high in 3Q2017

In 3Q2017, the total number of properties put up for auction increased 26.7% q-o-q, or 14.8% y-o-y, to 209 units. The number of mortgagee listings hit a new high — 82 of 209 (39.2%) — in the period, despite improving market sentiment, according to Knight Frank in a report on Nov 10.

Residential properties dominated the number of auction listings: Of 18 properties sold under the hammer last quarter, 12 were mortgagee sales — 10 residential properties, one industrial factory and one shophouse.

798430-Graph-1 - auction

Total sales value increased 33% q-o-q, or 85.7% y-o-y, to $39.3 million in 3Q2017. Mortgagee sales accounted for $25.5 million of auction sales during the period — the highest value recorded since 1Q2011.

The residential sector saw the biggest jump in mortgagee sales value — a 183% q-o-q increase and an astounding 743.7% y-o-y spike in 3Q2017. Ten of the 15 residential properties sold under the hammer were mortgagee sales. Of the 10, three were landed and the rest, condo or apartment units.

Although Singapore saw modest economic growth, the shophouse sector did better, with a 31.9% q-o-q increase in sales value from two transactions valued at $6.9 million in 3Q2017. While the number of industrial properties put up for auction increased 32.4% q-o-q to 49 units — the highest in a decade — only one was sold under the hammer for $440,000 last quarter compared with a 10-year moving average of three units a quarter.

Knight Frank estimates another 180 properties will be put up for auction in 4Q2017. If business sentiments and employment outlook were to deteriorate, and incoming US Federal Reserve chairman, Jerome Powell, imposes US interest rate hikes, more properties could enter the auction market as mortgagee sales in 4Q2017, according to the property consultant.

ea9cdc-Table-1 - auction.JPG

In the meantime, as the overall business outlook improves, interest in acquiring or selling properties is likely to pick up, says Sharon Lee, director and head of auction at Knight Frank Singapore.

Adapted from : EdgeProp Pullout, 20 November 2017