Mortgagee sales shot up fivefold last year as over-committed borrowers defaulted on repayments.
There were 159 forced sales listings last year, up from just 32 in 2013, said Colliers International.
About 78 per cent of the listings were residences, the rest being commercial or industrial real estate.
Almost all of them came from banks, with a handful from commercial credit companies.
The spike in bank sales came on the back of a “stricter regulatory and financing environment”, where borrowers in default are finding it challenging to sell their properties on their own, said Ms Grace Ng, deputy managing director at Colliers International.
Loan curbs, or the total debt servicing ratio, for instance, were introduced in June 2013 to stop buyers from overstretching themselves.
As a result, buyers have become more guarded, Ms Ng said.
She added that the large number of bankruptcies has not helped either.
Figures from the Insolvency and Public Trustee’s Office under the Ministry of Law showed that 1,661 people were made bankrupt in the first 11 months of last year.
This is not far from the 1,992 bankruptcy orders issued in 2013 – the highest since 2009.
DTZ associate director and head of Singapore research Lee Nai Jia pointed to the weak rental market, which has made it tougher for buyers to finance their mortgage payments.
Vacancy rates stood at 7.1 per cent in the third quarter of last year, exceeding 7 per cent for the first time since 2006.
Some owners may even walk away from their loans – a practice known as ruthless default, Dr Lee said.
But this likely occurs only in extreme cases, as it affects borrowers’ reputations and makes it tougher for them to get loans in future.
Many of the properties put up for sale by the banks are non-landed homes in prime districts 9 and 10, comprising units from projects such as Thong Sia Building in the Orchard area, The Verv in River Valley, and Botanic Gardens Mansions in Napier Road.
A 1,926 sq ft apartment at The Laurels in Cairnhill Road, completed in 2013, was priced at $4.1 million, according to a Straits Times check last week.
The banks are putting up luxury apartments from the newer prime districts 1 and 4 as well, such as Marina Bay Residences, The Sail @ Marina Bay, Reflections at Keppel Bay and Turquoise in Sentosa Cove.
A 1,755 sq ft maisonette at Pearl Bank Apartments in Outram with 54 years left on its 99-year lease was going for $1.38 million.
Even shoebox units, like a 517 sq ft single-bedroom apartment at Estilo in Wilkie Road which was put up for auction last month, have not been spared.
“It’s about whether the owner faces equity constraints,” said DTZ’s Dr Lee.
“If he has a property beyond his affordability – doesn’t matter what type – it will still go under the hammer.”
More landed homes are also being put up for sale by banks, especially big corner terraces or semi-detached houses, noted Knight Frank auctions head Sharon Lee.
“It could be due to the high quantum or inefficient layout,” she said.
Ms Lee added that bank sales typically sell at market value, or slightly below, so home seekers and investors are usually keen.
DTZ auctions head Joy Tan said: “Bank sales are popular among buyers because they are able to get a good quality apartment at market rates.”
Colliers’ Ms Ng said: “Buyers know that the seller has a serious intention to sell.”
She added: “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.”
Properties priced above $5 million, for example, may come with bigger discounts, compared with those priced around $1 million to $1.5 million, which are within the reach of more buyers.
While only 22 properties out of the 159 mortgagee sales listings were sold at auctions last year, Ms Ng said that most will eventually be moved through private negotiations after the auctions.