Mortgagee sales down, focus of forced sales changes

Terralink figures show there were 187 forced sales in New Zealand during September, compared to 188 in august and 217 in July. The highest number recorded this year was 264 in May.

Terralink managing director Mike Donald said that while forced sales are still some five times higher than the pre-recession period, the trend is moving downward for the first time since 2008.

"The latest figures show a slight drop on the month before, but it is the overall trend which is most significant. Over the last quarter we have seen an ongoing downward trend that signals, at an overall level, that the pain is easing for property owners," Donald said.

Regions that saw the greatest fall in mortgagee sales in September included Manawatu (down 53%), Wellington (down 50%) and Canterbury (down 65%). However, some areas have seen increases including Otago (up 22%), Auckland (up 12%) and Waikato (up 9%).

While the number of mortgagee sales has trended downwards, Donald said increasingly it has been individual property owners with only one property rather than property investors facing forced sales.

In September 24% of all mortgagee sales were for properties owned by ‘mum and dad' homeowners compared to 23% in August and 21% in September 2009.

"Whilst the overall downward trend is positive, if we drill down further we not only see an increasing percentage of ‘mum and dad' homeowners losing their only home, but the profile of the lenders forcing the sales has changed too. "

"As you might suspect, the vast majority of mortgagee sales through 2008 and 2009 were second tier finance companies calling on their loan defaults. However, in 2010, it's increasingly the first tier lenders, or major banks, forcing sales. Across 2008, only 32% of mortgagee sales were forced by first tier lenders, but in 2010 so far, first tier lenders have already forced 42% of all mortgagee sales."

Donald said that while the effects of the recession appear to be easing, it is increasingly ordinary Kiwi homeowners losing their home.

"Sadly this trend is likely to continue for as long as there is a sluggish economy," Donald said.