Rise in mortgagee sales of HDB flats in Singapore

THERE are 14 HDB flats listed as mortgagee sales in the private treaty lists of the five property auction houses as at the month of July. As HDB flats are considered public housing flats and are regulated by the government, they are not allowed to be put up for sale by auction. “Even banks need to get approval from HDB before they can foreclose on an HDB flat,” says an auctioneer who declined to be named. “We are also not allowed to auction HDB flats on behalf of their owners.”

Therefore, HDB flats that are mortgagee sales only appear on the private treaty lists of auction houses. So far in 2017, the number of HDB flats listed as mortgagee sales is almost double that in the corresponding period in 2015 and 2016, according to Eugene Lim, key executive officer of ERA Realty Network. “Mortgagee sales are usually done as a last resort, when all avenues to rectify the default on the part of the mortgagor have been exhausted; that is, the mortgagor has no means of repaying the mortgage.”

Sharon Lee, Knight Frank’s head of auction, agrees. “That’s the key difference between HDB and private property,” she says. In the private residential segment, there is a mix of investors and owner-occupiers. Some of the mortgagee sales could be by investors who have overextended themselves, or where the rent is insufficient to cover the monthly mortgage payment and the owner is forced to let go of the asset, she adds.

HDB flats, on the other hand, are primarily owner occupied. “People do not want to lose the roof over their heads,” says Lee. “So usually, if they lose the property, it could be because of personal debt or loss of their job and hence, household income.”

The overall total of 14 HDB flats listed as mortgagee sales is still low compared with the 104 private residential properties listed as mortgagee sales, according to Knight Frank Research’s 1H2017 report on June 30. 

Five of the 14 HDB flats that have emerged as mortgagee sales are located in the Woodlands and Admiralty area. The other suburban HDB estates where mortgagee sales have popped up include Bedok, Choa Chu Kang, Sengkang and Yishun. In the central region, mortgagee sales of HDB flats can be found in the likes of Bishan, Cantonment Close and Commonwealth Close.

The speed at which these HDB flats will be taken up depends on location, among other things. “Flats that are located within mature HDB estates and in prime central ­areas tend to be snapped up quickly,” says Joy Tan, head of auction at Edmund Tie & Co.

On the market is a 904 sq ft, four-room flat at Bishan Street 12. The indicative price of the property is S$525,000 (RM1.6 million), or S$580 psf. It is located within walking distance of the Bishan MRT station and Junction 8 shopping centre. The unit has a 99-year lease with effect from 1986.

At Cantonment Close, near the Tanjong Pagar MRT station, a 968 sq ft, four-room corner HDB flat on the eighth floor of one of the blocks was put up for mortgagee sale. The unit is located in the vicinity of amenities at Tanjong Pagar Plaza, Icon Village, 100AM and Tanjong Pagar Centre. It is on the market for S$700,000 (S$723 psf). The HDB flat has a 99-year lease with effect from 2002.

In the Outside Central Region, a 1,152 sq ft corner, four-room premium HDB flat in Woodlands Drive 14 has been put up for mortgagee sale. The unit, on the second level of the block, is tagged at S$380,000 (S$330 psf).

This article first appeared in The Edge Property Singapore, a pullout of The Edge Singapore, on July 24, 2017.

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