5 times more people unable to pay off mortgages and forced to sell property

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An honorable member of the Coffee Shop Has Just Posted the Following:

5 TIMES MORE PEOPLE UNABLE TO PAY OFF MORTGAGES AND FORCED TO SELL PROPERTY

Post date:
15 Jan 2015 - 4:59pm








The number of properties forced to be sold increased by five times last year as the number of bankruptcies increased as well.
In 2013, there were only 32 forced sales listing but last year, this spiked up five fold to 159, Colliers International said.
78 percent of these were residences while the rest are commercial or industrial.
Also, most of these mortgagee sales were conducted by banks and a few from commercial credit companies.
More borrowers are defaulting on their loans because of the "stricter regulatory and financing environment" and are thus finding it difficult to sell their own properties, deputy managing director at Colliers International Grace Ng told The Straits Times.
In June 2013, the government introduced loan curbs, or the total debt servicing ratio.
But Ms Ng said that buyers have thus become more guarded.
Moreover, the number of bankruptcies remain high. The Insolvency and Public Trustee's Office showed that for the first 11 months of last year, there were 1,661 people who were made bankrupt.
This is comparable to the 1,992 who were made bankrupt in 2013 and already 2013 saw the highest number of bankruptcies since 2009.
Moreover, with the weaker rental marker, buyers are not able to recoup for their mortgage payments too, DTZ associate director and head of Singapore research Lee Nai Jia added.
In the third quarter of last year, vacancy rates rose to a high of 7.1 percent. This is the highest since 2006, where vacancy rates was 7 percent.
Dr Lee said that where owners cannot pay for their loans and became desperate, they have also gone into ruthless default, or simply not pay.
Of the properties that the banks have put up for sales, many are actually non-landed properties in prime districts 9 and 10, such as the Thong Sia Building in Orchard, The Verv in River Valley, and Botanic Gardens Mansions in Napier Road.
Even the Marina Bay Residences, The Sail @ Marina Bay, Reflections at Keppel Bay and Turquoise in Sentosa Cove have also been put up for sale by the banks.






"It's about whether the owner faces equity constraints," DTZ's Dr Lee said.
"If he has a property beyond his affordability - doesn't matter what type - it will still go under the hammer."
Knight Frank auctions head Sharon Lee said that there are also more landed properties which are meeting the same fate.
"It could be due to the high quantum or inefficient layout," she said.
But there is a positive side to this.
"Bank sales are popular among buyers because they are able to get a good quality apartment at market rates," DTZ auctions head Joy Tan said.
"Buyers know that the seller has a serious intention to sell," Colliers' Ms Ng said.
"There may be some discounts given for properties that have been put up for auction more than once, although the extent of the discount will depend on the quantum price."
For example, if a property is put up for sale for more than $5 million, discounts as much as $1 million to $1.5 million might even be given.


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