Mortgagee sales hit record levels in first quarter

This year is shaping up to be the toughest ever for embattled property owners, with a record number of mortgagee sales recorded during the first three months of 2012.

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Terralink International’s latest figures show there were 524 mortgagee sales from January to March. This is 100 more than during the same period last year, and more than the previous record of 519 in 2010 when New Zealand was at the height of economic recession.

Terralink Managing Director Mike Donald says the numbers are a genuine cause for concern, and confirm a trend that began late in 2011.

“Numbers began to trend upward during the second half of last year, back to recession level highs. These new figures indicate we may be a long way off economic recovery. In fact, things have never been worse for property owners.

“In just three months there were 524 mortgagee sales, that’s 44 a week, or nearly six every single day,” says Mr Donald. 

The figures also show a marked upturn in the ‘big five’ banks forcing mortgagee sales. In 2009 the proportion of sales involving tier one lenders was just 36%. In the first quarter of this year, that has risen to 55%.

A number of regions are experiencing dramatic increases compared to the first quarter of 2011. Northland jumped 155% from 20 to 51, while Otago recorded an increase of 153%, from 15 to 38. Wellington property owners also felt the pinch with 41 mortgagee sales, up 71% from the same period in 2011.

A number of regions, notably Hawke’s Bay and Canterbury, experienced a modest decrease in mortgagee sales.

Mr Donald says while the overall picture remains bleak, the number of ‘Mum and Dad’ property owners facing mortgagee sales appears to be easing.  

“If there’s a silver lining anywhere in the figures, it’s the drop in the proportion of individuals with a single property facing mortgagee sales, from 26% in the first quarter of 2011 to 21% this year.

“On the other hand, there has been a large increase in the number of mortgagee sales for individuals, considered to be property investors, who own multiple properties. The figures indicate this group is under significant pressure, a reflection, perhaps of reduced equity as property values flatten or decline, and increase pressure on cash flows” says Mr Donald.

Terralink’s figures fly in the face of recent claims that the number of mortgagee sales is declining.

“Our data is based on legal registration of actual foreclosures not on listing data where the term ‘mortgagee sale’ is often simply a marketing term. I challenge anyone to look at these figures and tell me things are getting better for Kiwi property owners,” says Mr Donald. 

 

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