Blog: The Landlord says...

A little while ago I commented on the coverage of mortgagee sales in New Zealand. This week there was a useful bit of information put out which was, arguably, the more definitive research with real numbers.

The stories written in the past had been reasonably sensationalist and not particularly scientific. The new survey, from Terralink, is based on registered mortgagee sales.

What is interesting is that the percentage and actual numbers of properties sold by this method is pretty small; 191 properties nationwide in January. But growing.

We shouldn’t be surprised that the number is growing.

The points which are useful to note are that many of the sales are being done by second tier finance crowds, not the mainstream banks. I’m not sure many people knew finance companies were involved in this market.

Secondly there are always winners and losers in these types of transactions. The winners will be the buyers as it seems often the vendor will let the properties go at whatever price they can get.

For investors mortgagee sales are useful to look at, but as we reported in NZ Property Investor Magazine, there can be fish hooks in these sorts of transactions and buyers need to be aware of what is happening.

The other trend we may see is a spike in mortgagee sales while finance companies cash up their loans, and then the mortgagee market will be more focussed around what banks are doing. The message I am hearing across the market is that banks are finding more and more of their lenders are running into trouble or difficulties with repayments, but to their credit (no pun intended) some are setting up divisions within the bank to identify potential problem clients and help them before it is too late.

When it gets to the too-late stage there is little option but to go to a mortgagee sale.

I had to laugh at this headline in New Zealand’s only national newspaper the other day. The story was about the frightening increase in the number of mortgagee sales.

According to the report there was a huge increase in the number of properties going to mortgagee sale and this was a sign that banks were worrying about the market.

The reality is measure was totally unscientific – searching two big property websites for the word mortgagee. Secondly in terms of the actual number of mortgagee sales, compared to number of houses on the market, the figure was quite small.

For a good response to the story it’s worth reading Alistair Helm’s response at Unconditional.

The story is even more stunning as it was bylined to one of the most experienced and awarded business journalists in the country. I do have to wonder whether the editors and sub-editors got hold of the copy, realised they didn’t have a lead for the paper and did a beat up on this.

What concerns me is that some of the mainstream media are having a field day going out and writing headline grabbing stories bagging the property market.

Readers will know I am more positive about the market, or pockets of the market, and try to put a balanced view out there.