More Singapore homeowners defaulting on mortgages

Victor Kang7 Oct 2019

For the first half of 2019, there were 213 cases of mortgagee sales, compared with 258 for the whole of 2018. The figures are more than double the 123 mortgagee sales registered in 2014.

While new home launches are witnessing brisk demand in Singapore, the city-state is faced with a growing number of homeowners defaulting on their mortgages.

Avenue South Residence sold 276 of the 300 units during its opening day of sales last month, with prices ranging from $982,000 for a one-bedroom unit to $2.63 million for a four-bedroom apartment.

Credit Bureau Singapore data, on the other hand, showed that 79 individuals defaulted on their mortgages as of July this year. A total of 156 mortgage defaults were registered last year, up from 112 in 2017 and more than double 2015’s 65 such cases.

The data matches Colliers International Singapore compiled figures on mortgagee sales by major auction houses, reported South China Morning Post.

For the first half of 2019, there were 213 cases of mortgagee sales, compared with 258 for the whole of 2018. The figures are more than double the 123 mortgagee sales registered in 2014.

The houses on auction do not also appear to be selling. Knight Frank data showed that only three properties – two flats and a shop – were sold out of its 400 listings, which include residential, industrial and commercial properties, for Q2 2019.

This worked out to a success rate of 0.8 percent, down from 1.4 percent in Q1 2019 and 6.4 percent in Q1 2018.

Analysts attributed the rising trend of defaults to a confluence of factors – rising unemployment, slowing economy, fewer resale property buyers and lack of tenants.

Tricia Song, director and head of research at Colliers, also attributed the hike in auction listings to the cooling measures introduced by the government in July last year, in which stamp duty rates were increased and loan-to-value limits were tightened for residential property acquisitions.

ERA Realty head of research and consultancy Nicholas Mak noted that these troubled homeowners may have over-leveraged themselves during the market peak. “They may have bought a number of investment properties thinking they could collect rental income to sustain the mortgage once the place is completed, and later found they could not get a tenant.”

That the cooling measures worked, is not a bad thing since it brings safety to the financial markets, said other analysts.

“[Singapore] tightened loans by using the Total Debt Servicing Ratio in 2013, and, for the third time, lowered loan limits quite a lot, so those have brought more safety to the market,” said Ku Swee Yong, CEO of real-estate brokerage firm International Property Advisor.

“The government doesn’t want exuberance in real estate because that can be one of the things that choke our banks,” explained Ku. “So that’s why even though home sales continue to be brisk, loans are not necessarily growing at the same pace as the total number of homes in Singapore.”

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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email


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