Due to the existing oversupply issue and the weaken rental market. There has been an increasing number of properties. They have listed that for mortgagee sales – newly completed or uncompleted homes.
A mortgagee sale is a process. In which the bank will be ‘force selling’ a borrower’s property. This is to recover the mortgage money. When the borrower defaults on the loan repayments.
So far, they have auctioned a total of 13 residential properties. Builders either finish them in less than 3 years or are still constructing them. According to JLL, this is a sharp increase from just only 3 units being put up as of the same period in 2015. One of the newly completed homes listed for a mortgagee sale in April 2016 is a 4-bedroom residence at the Silversea condo in Marine Parade. The developers finished the development in 2014, and they sold the subject unit for S$3.9 million (or S$1,529 per square foot).
Another mortgage sale was for a 3-bedroom unit at OUE Twin Peaks – the very first unit to be put under the hammer. They finished the project just last year in 2015.
Market watchers said that the property market is starting to feel the influx of those newly completed residential projects. After the property boom from the year 2011 to 2013.
We also noted that owners are encountering difficulties. When trying to sell units larger than 1,500 square feet. As the price tags are usually above S$2 million.
Mainly penthouses make up some of these units. Which buyers purchased from the floor plan. Thus upon receiving keys to their units. Owners found it challenging to rent or sell the property. Due to its undesirable unit layout.
In addition, property investors were hugely drawn to getting shoebox apartments in Singapore during the property boom due to their bite-sized price tag. Yet, investors who are managing more than one mortgage will experience even greater stress as the leasing market continues to soften.
Thus many are unable to find tenants, or even forced to take in lower rents. As a result, they may find it difficult to service their loan repayments.