Posts Tagged ‘foreclosure’

The latest data of mortgagee sales for May show that there continues to be no let up in the pain being suffered by heavily indebted property owners. Earlier in the year there appeared to be signs of an easing and a sense that the worst may have been over. The May figures have now put pay to that.

Data collected and analysed by Terralink show that in the month of May there were 264 registered mortgagee sales, that is up from 246 in April and up 7% from the figure of 247 in May 2009.

The chart below track the monthly sales since the beginning of 2007 – long before the recession which has so significantly driven the situations which have led to this scale of mortgagee sale.

In the period between January and May of this year a total of 1,029 properties have been sold as mortgagee sales – this is up 6%. However what is more significant is the fact that whilst year-on-year mortgagee sales are up 6% across these first 5 months of 2010 the total sales of all properties across NZ is down 10%. This has resulted in mortgagee sales for 2010 now representing over 4% of all sales. In the month of May just over 5% – or put another way 1 in 20 properties sold were mortgagee sales. The chart below tracks this trend as the proportion of all sales as represented by mortgagee sales since the beginning of 2007.

Another alarming trend as highlighted by Terralink in their analysis of the mortgagee sales in May was a significant change in the type of property owners who are being forced to sell. Their was seen to be an increase in the number of mortgagee sales of properties owned by individuals rather than companies or mulitple owners. It appears that more and more of those individuals are losing their only property – and more than likely it’s their family home. In 2009 when the perception was, that the peak of mortgagee sales was being experienced, it now appears that most of those were properties owned by property investors who had over-extended themselves during the property boom. This year the pain seems to have shifted to ordinary New Zealand families.

In May 2009 just under 50% of mortgagee sales were for properties owned by an individual. In the latest data for May 2010 that number has increased to 62%, and one in five of those forced sales was held by an individual who only owned one property.

For clarification mortgagee sales data is derived from legal registrations of actual mortgagee sales as detailed on the legal certificate of title , these numbers may contain sales for a variety of property and land transactions. These transactions occur when the owner of the property has become in default of the terms of the loan from a bank or other lending institution. In  most cases such lenders endeavour to come to an agreement with the owner to arrange suitable payment terms, however if these terms are not met or the owner simply cannot manage to make the necessary level of payment the lender will have no alternative but to instigate a mortgagee sale whereby they take possession of the legal title to the property and sell the property to recover the outstanding amount of the loan. If any surplus from the sale is available after paying agents fees and the lender then that will be paid to the property owner.

The latest data of mortgagee sales for the month of February show that the pressure on homeowners struggling under mountains of debt may be easing.

A total of 121 mortgagee sales were registered in the month of February in data released by Terralink International. This total compares to 124 for the same month last year. This is the first time since November 2007 that the year on year change has shown a negative variance. For the past 27 months the picture has looked bleaker every month with some months showing year on year increases of up to 8 times. On a seasonally adjusted basis the month of February showed a 30% decline from January.

As the chart below shows the figures for February are traditionally lower than other months, and it is quite likely that the March sales may well be higher than February has been.

Seen over the course of the past 3 years it is very clear the impact that the economic recession had on distressed homeowners who were forced to accept mortgagee sales as a route to exit the debt burden.

These trends in mortgagee sales naturally track closely the number of listings that come onto the property market as mortgagee sales or mortgagee auctions. Realestate.co.nz provides a detailed tracking of these listings for the past 3 years on a weekly basis. The latest data is that there are currently 291 properties being marketed on the website as mortgagee sales. The chart below track the progressive build of listings over the period of 2008 and then the subsequent decline in number which began around a year ago.

In terms of regional breakdown of the sales of mortgagee properties, the majority of the sales are to be found in the larger regions of Auckland (37%), Waikato (11%), Canterbury and Wellington (7% each). The slightly higher representation of Northland at 9% of all sales in February and Otago (inc Queenstown) at 8% of sales would tend to indicate pressure in holiday homes potentially.

The regional breakdown on February sales is detailed below with the comparative latest 3 month average figures as well as year on year variance.