Terralink Mortgagee Sales Report

Total mortgagee sales for 2009 reached a new record level with 3,024 registered sale transactions where the sale was a mortgagee sale. This annual total was more than 3 times the number of sales in 2008 and more than double the highest prior year (2002).

If for ease of assessment these sales were all of properties then they would represent 4.3% of all sales of residential properties sold in the year.

In terms of trends the monthly figures for 2009 show in the chart below a 3 month decline from the peak month of September which attained a level of 343 sales.

The early months of 2010 will be interesting to observe as the level of listings of mortgagee properties as tracked on realestate.co.nz has been falling for the latter quarter of 2009 and whilst picking up in the January again seems to indicate that the peak certainly in terms of new listings may well be behind us.

Whilst the number of recorded mortgagee sales slipped in October from the high of 343 in September they still remain historically high. A total of 298 sales were recorded in October taking the year to date figure to 2,465 - for the month this represents a 71% increase on the same month last year.

The chart above clearly shows not only the significant levels of sales in each of the months of 2009, but also the fact that this time last year marked the beginning of the steep rise in sales of mortgagee properties. This will provide the opportunity in the coming quarter to assess the year on year comparison more accurately.

The first 10 months of 2009 has seen 2,465 sales - this compares to 964 in the same period of 2008 and just 370 in the first 10 months of 2007 clearly highlighting the significant fall out of the recessionary impact of unemployment and tighter monetary policy and the consequential effect on heavily leveraged investors.

The scale of the rise in mortgagee sales can be best seen in this chart below showing the full history by month since from 2006 when a monthly total of 50 would have seemed high.

The make up of the sales in October comprise a mix of single family homes as multiple property portfolios (more than 5 properties owned by a single entity). The impact of the recession is certainly forecasted by Terralink to continue to see high levels of mortgagee sales into 2010.

Whilst sales levels have continued to rise the number of listings of mortgagee properties on the market has begun to stabilise in the current year with the level of interest as measured by the keyword search of mortgagee showing signs of falling in the last 3 months - these statistics are presented in recent posts on the Unconditional blog on the realestate.co.nz website.

Total mortgagee sales in September as reported by Terralink International surpassed the high of 321 set in July of this year to reach 343 in September. This takes the total of mortgagee sales of property to 2,167 for the 9 months of 2009, compared to a total of 790 for the same period in 2008.

As can be seen from the chart above on a year on year comparison the scale of mortgagee sales surpasses prior years by a significant margin. The sales for September 2009 represented a 130% increase over September 2008 - a time when mortgagee sales were already on the rise.

Total sales for the 9 months of 2009 at 2,167as shown in the graph dwarf the same 9 month period in any of the preceding years.

The key change in the structure of sales is the shift from the sales being predominantly in the major centers to provisional NZ. The chart below shows this with Auckland as a % of sales in September 2009 falling to just over a third of sales as compared to 44% of all sales a year ago.

The key regions which have witnessed the largest increase in sales were Northland going from 3 sales in Sep 2008 to 33 in Sep 2009 and the Hawkes Bay going from 3 sales in Sep 2008 to 24 sales in Sep 2009.

A total of 241 mortgagee sales were recorded in the month of August as reported by Terralink - down from the peak of 321 reported in July. This takes the year-to-date figure to 1,824.

When compared to this time last year the monthly total shows an increase of 141% whilst the year-to-date shows a 285% - the year-to-date figure of Jan to August in 2008 was just 641 sales.

The decline from the peak was in someways expected as the lead indicator of mortgagee listings as tracked on realestate.co.nz had been witnessing a stabilising in the stock level of mortgagee listings by real estate agents for a number of months. The number of listings of mortgagee residential properties peaked at just over 400 in the first few months of this year and currently stands at somewhere over 300. It should be noted that the mortgagee sales reported by Terralink do include non-residential sales and this accounts for the overlap of sales to listings as shown in the chart below.

The mortgagee property sales not only show large actual numbers but also have risen to levels over the past 18 months that represent a small but significant component of all residential sales. The chart below track the past 14 years and shows the actual sales in each year for the first 8 months of each year represented as the proportion of all residential sales in those periods.

Total mortgagee sales for the month of July amounted to a staggering 194% increase over the same month last year. A total of 321 registered mortgagee sales were reported by Terralink in a report issued today for the month of July 2009.

That total for the month takes the year to date figure for 2009 to 1,583. That figure exceeds the total year in the preceding highest year - that being 2001 when in 12 months a total of 1,539 sales were registered.

Each month this year the total has outstripped the prior year by more than 100% and completely dwarfs the 2007 year figures.

Within the total of 321 sales there are a diversity of properties encompassing property development units as well as private residential and investment residential. The traditional view of mortgagee properties being single family homes where the property is family owned and represents the only owned property only represents around 20% of all the sales of mortgagee properties over recent months, although the rate of sale of these properties have equally been rising over recent months.

In terms of regional variation the majority of sales still are represented in the Auckland region. In July 144 of the 321 sales were in Auckland, 26 in Wellington and just 24 sales were reported in Canterbury. The Canterbury region has seen a decline over recent months with the biggest fall in the Christchurch city area where sales have dropped by half since a the June figures. The map below details the sales by region comparing the totals as against July 2008.

The latest Terralink report on mortgagee sales show that in May there was a total of 247 registered mortgagee sales. This compares to 251 in April and just 88 a year ago.

A key component of the make up of mortgagee sales as reported by Terralink is the proportion of mortgagee sales that were accounted for by individuals or companies who owned multiple properties. In fact of the 247 mortgagee sales registered in May just 47 properties were classified as “single family homes” - the balance of 200 were properties which were owned as a portfolio of properties by individuals with investment properties or companies which had gone into liquidation or defaulted to an extent that the lender had foreclosed on the properties seeking to salvage the debt.

Judged on the past 15 years the level of mortgagee sales continues to demonstrate that this period of recession has been felt more significantly with close to 1,000 mortgagee sales in the first 5 months of this year - the previous worst start to any year was 2002 when in the January to may period there were 642 regsistered mortgagee sales.

On a regional basis the Auckland region continues to show the highest representation of mortgagee sales - the pair of charts below compares May 2009 with May 2008 and highlights the extent of the polarisation of sales activity to the Auckland region.

Year on year the Auckland region is up over 200% to see 109 mortgagee sales in May, next largest activity is in the Canterbury and Waikato regions with 38 and 27 sales respectively.

The latest report from Terralink shows that mortgagee sales in the month of April reached an new peak of 251.

This figure compares to the March figure of 201 and the April 2008 figure of 90. The graph below graphically demonstrates the rise of mortgagee sales across NZ over the past 15 years with the clear perspective of the most recent rise as compared to the levels at the turn of the decade.

The total of 251 mortgagee properties represents 4% of the total sales for the month of April as reported by the Real Estate Institute. This is a considerable rise in the representation of mortgagee sales as a portion of all sales. The first 4 months of 2009 has seen the total of mortgagee sales (726) represent 3.3% of all sales reported by the Real Estate Institute over that first 4 months (21,838), comparing that with prior years gives a very clear representation of the relativity of mortgagee sales within the overall mix of residential sales.

The majority of mortgagee sales consistently remain in the major metropolitan areas of the country. Nearly two thirds of all mortgagee sales were recorded in the 3 main cities, this is a significant increase from 48% a year ago. There are no data available to show the representation of sales by type or property so as to ascertain  the make up of apartments as compared to houses. The regional split of sales is represented in the charts below:

The monthly report on the level of mortgagee sales produced by Terralink International shows that in the month of March 201 properties were sold under the instruction of the lender on behalf of the owner.

This level represent more than a 4 fold increase as compared to March 2008 when just 42 properties were sold as a function of mortgagee sales. The graph below tracks the monthly sales over the  3 years.

At a regional level the majority of sales (close to 50%) are accounted for by the Auckland region with double digit level of sales reported in Northand, Waikato, Bay of Plenty, Wellington, Canterbury and Otago. The highest year on year increase was witnessed in Wellington with 15 sales in March 2009 as compared to just 1 sale in March 2008.

The summary report containing all graph and data can be dowloaded here.

The latest data released by Terralink shows that 124 properties recorded as repossessed mortgagee sales were registered as sold in February, down on the 150 sold in January and a significantly lower level that the 191 recorded in December.

When compared to the same period in 2008 the figures do show a significant increase - just 46 sales in February 2008. On an annualised basis the past 12 months has seen an almost trebling of sales with 1,463 sales up from just 533 in the 12 months to February 2008.

The figures mirror closely the reported trend in listings and searching for mortgagee properties on realestate.co.nz which last week reported a fall off in inventory and less activity in searching for mortgagee property.

On a regional basis the majority of sales were recorded in Auckland (51), with 17 in Canterbury, 13 in Northland and 10 in the Waikato - collectively these 4 regions accounting for 65% of all sales.

A copy of the full graphs is available to download here (754KB pdf).