Mortgagee sales reach 1-in-25 level

Growing numbers of Kiwi homeowners are facing the prospect of handing over the house keys, with mortgagee sales now accounting for one in 25 property transactions.

Figures released today by property information company Terralink show mortgagee sales hit 251 in April the highest monthly total in 15 years. In April last year there were just 90 forced sales. That means mortgagee sales accounted for just over 4% of the 6210 houses that sold in April. A year ago mortgagee sales represented just 2% of the total.

This is the fifth month Terralink has released data on forced sales in New Zealand. The numbers have been consistently higher than the previous year, reflecting the increasing pressure homeowners are under as the recession bites.

And there is no real sign of hope in the immediate future.

Terralink managing director Mike Donald said mortgagee sales were hitting ordinary homeowners, and 36% of forced sales were driven by the major banks. He expects mortgagee numbers to keep increasing, especially as unemployment rises.

"There's no slowing down 251 is a pretty strong increase and when you look at the curve from December it's still accelerating upwards. There is no sign of it abating."

Treasury has forecast that house prices will fall 12% by March next year, identifying rising unemployment as a pressure factor.

Latest data from Statistics New Zealand show unemployment has reached 5% and is widely predicted to reach 160,000 by the end of the year.

The increasing number of mortgagee sales was also reflected in listings on real estate sites. Realestate.co.nz chief executive Alistair Helm said the site had 375 mortgagee listings this month, compared to 325 in June last year and 98 two years ago. The keyword "mortgagee" was the number one search term by visitors to the site, which has more than 110,000 listings.

Not all areas around the country were experiencing mortgagee sales to the same extent more than 80% of mortgagee sales were recorded in the North Island. Donald says this could be because higher house prices in the region meant larger mortgage payments, leading to increased pressure on homeowners. The median house price in Auckland is now $450,000; in Wellington it is $380,000. There were no mortgagee sales in Southland, where the median house price is $180,000.

Auckland continued to be the worst-hit area, accounting for just under half of all mortgagee sales. There were 122 sales in the greater Auckland region in April, compared to 28 in the same month last year. Manukau and Auckland City carried the brunt of the burden, followed closely by the North Shore, Rodney and Waitakere.

In the major centres, Canterbury recorded 27 sales (six a year ago), Waikato 25 (12), Wellington 11 (nine) and Otago 10 (eight). Bay of Plenty also had an increase with 15 sales (five). There were increases in Northland (10 sales, up from four), Manawatu (10 sales, up from nine), Hawke's Bay (eight sales up from two), Taranaki (four sales up from one) and Marlborough (three sales up from none).

Financial experts say struggling homeowners should seek help at the first sign of trouble. Banks also encouraged their clients to contact them as soon as they knew meeting the mortgage payments could be difficult. Dealing with the problem earlier made it easier to solve.

- © Fairfax NZ News