The number of repossessed properties in Singapore have risen 18% and are expected to increase significantly in 2009 and 2010, according to analysts.
The deteriorating economy and rising level of retrenchments are having a spillover effect on Singapore’s property market with auctioneers witnessing an increase in repossessed properties, according to Colliers International.
The number of repossessed properties put up for sale by banks and financial institutions rose 18 % from the fourth quarter of 2008 to the first quarter of 2009. Colliers is warning that this number is just the tip of the iceberg and is expected to go up further in the next two years.
“We can expect to see a more significant number for repossessed properties in the later part of the year or in 2010. This is due to the general lag time of approximately six months or more between when a buyer defaults on his loan repayments and when the bank repossesses the property and puts it up for auction sale,” said Grace Ng, deputy managing director and auctioneer of Colliers International.
The majority of repossessed properties are in the residential sector with 77% in this category. Over half of these were apartment or condominiums and the rest were terraced or detached houses. The majority were at the lower end of the market which is an encouraging sign, according to analysts.
“It is a positive sign that we are only seeing a small number of residential properties in the prime districts being put up for mortgagee sale. This could mean that the highest echelon of the society has yet to succumb to the badly-embattled financial market,” Ng added.
Colliers International expects bank default cases to rise and the number of properties put up for mortgagee sale to continue growing as more retrenchments are expected in 2009.