More Private Properties Sold At A Loss - Differing Perspectives

Singapore: As prices dip across the island, sellers were taking some hits. Some owners sold their private homes at a loss last year. At the upper end of the property market, sellers of high-end properties took losses upwards of $2 million. Meanwhile the rental market likewise softened.

Property transaction data from SRX showed that 161 transactions or 4.2% of the secondary market deals suffered losses last year, up from just 1.96% or 103, in 2013.

Losses in 2013 were 1.96% of secondary market transactions.
Losses in 2012 were 1.5% of secondary market transactions.
Losses in 2011 were 1.8% of secondary market transactions.

Contrast this: the percentage of sellers in the secondary market who achieved capital gains fell from 97.8% in 2013 to 95.4% in 2014.

These are high numbers and in my view spoke well for the performance of the Singapore property market in 2013 and 2014.

Now here are more perspectives and views:
"Cooling measures really hit the market last year. Prices were dropping by then and owners could feel the rental market getting weaker. Perhaps for some owners, they couldn't see the light at the end of the tunnel and decided to cut their losses," said SLP International executive director Nicholas Mak.

Most of the losses are likely to have been in the middle to high-end segment as those prices fell more drastically, said Mr Lee Liat Yeang, a real estate lawyer at Rodyk & Davidson.

The biggest losses were suffered mainly in districts 4, 9 and 10. Many of those properties had been acquired in 2007, or at the peak of the previous property boom.

"Those who bought before the Lehman Brothers crisis were hoping prices would go up or at least stay the same... But the high-end segment never really recovered after the crisis. After waiting for six years, they realised the prospect of recovery is still low, so they decided to move on," said Mr Lee.
Such fire sales seem to be gathering pace, with at least two large money-losing deals so far this year.

This month, a 1,076 sq ft unit at The Clift in McCallum Street went for $1.9 million, at a loss of $965,600, or 34 per cent. A 1,808 sq ft unit at The Orchard Residences in Orchard Boulevard sold for $5.5 million, at a loss of $2.253 million, or 29 per cent.

A total of 19 properties were put up for auction sale by mortgagees this month, up from six in January last year and three in January 2013, noted Colliers International deputy managing director Grace Ng.

The number of loss-making sales is tipped to rise this year, as supply from newly completed condominiums will raise competition for tenants and rising interest rates may add to holding costs, said Mr Mak. In all, 21,359 private condos are pegged for completion this year, and 20,919 next year.

Ms Ng expects mortgagee sales to hit 200 this year, up from 159 last year, in view of continued cooling measures and challenging conditions. "Sellers will continue to face increasing difficulties in disposing of their properties in the resale market."

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More Private Properties Sold At A Loss - Differing Perspectives

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