The Sunday Star Time headline today would have the reader believe that sales of mortgagee property (re-possessed by the bank) are rising at a “frightening” rate.
The article makes the following quote:
“TradeMe’s head of property Brendon Skipper and realestate.co.nz’s Alistair Helm say the speed of the increase is frightening”
I would like to set the record straight as I would not like to be misrepresented.
- I did not in the conversation with the journalist state that the rise in the number of listings of mortgagee properties on the market was “frightening” – I can accept that the quote could be misattributed as it seems to be a “joint quote” from both Brendon Skipper and myself. Clearly I cannot speak for any comment made by Trade Me.
- The level of listings on realestate.co.nz of properties that are described as mortgagee is not “frightening” – the fact is that today there are 298 listings – this represents just 0.37% of all residential property listings on the website. There are 81,252 residential listings of properties for sale from a total of over 117,000 listings on the website. A figure of 0.37% represents one listings in every 270.
- The current level is significantly higher than this time last year when the total was 122, however as shown in the graph displayed just last week on this blog the current level of 298 is not the highest level witnessed on this website – back in the final week of October last year the total stood at 311.
- The blog post last week “Mortgage listings on the rise” (which was the source content I directed the journalist to review) contained some valuable comments – one particularly from someone who has taken the time to review some of these “mortgagee” listings and had noted that they were not all true mortgagee properties for sale. Some had included the word “mortgagee” in phrases such as “Cheap Like a Mortgagee Sale!!” & “You Want Mortgagee Pricing??” . It is important to reinforce the fact that the real estate industry and our website does not have a specific category of listing which uniquely defines “mortgagee” – therefore any search for “mortgagee property”on the site is using a keyword search for the term in the listing description.
- Finally it is important to note that the newspaper headline states “mortgagee sales rise” – the only fact in the article is that the number of listings on 2 major websites which feature the word mortgagee is significantly up on a year ago. There are no facts availble in the real estate industry stating that the sale of mortgagee property is rising, or even how many mortgagee properties have been sold.
It seems like the Sunday Star Times editors need to see a dramatic headline regarding the downturn in the housing market EVERY Sunday- regardless of reality.
As you point out, .37% is a low fraction. 1 in 200 properties listed featuring the word ‘mortgagee’ is hardly frightening, unless you get scared easily.
Let’s hope most people read the article and see that this is just sensationalist reporting.
I believe the only trend that would see a truly concerning rise in mortgagee slaes would be for unemployment numbers to increase a long way beyond expectation.
Now THAT would be a frightening prospect.
Nate,
Could not agree more – that is the key point. Lead indicators such as unemployment rate, economic growth, investment in capital and education are the indicators that they should be focused on – rather than the sensationalised attention grabbing headlines to endeavour to sell newspapers.
Thanks for your thanks in point 2 above, Alstair. Where do I send the invoice for my services? Seriously, well done for setting the record straight – a number of other news media (inc National Radio) also picked up this story and ran with the “frightening” tag line, which is quite alarming and irresponsible journalism – they need to look at the underlying numbers as you point out.
Sounds like a tui ad to me
A “frightening” rise in mortgagee sales?! YEAH RIGHT!
or a certain story about a wolf.
0.37% is a ridiculous percentage to sensationalise
Greetings from Canada: I find it scary that your industry does not compile “facts” about mortagee sales in New Zealand. These are a valuable indicator of the health of the economy. Spend some time surfing the internet and discover the real truth about the crash presently happening worldwide. Google “Garth Turner,” for a start on Canada.
Leonard,
Thanks for the contribution and insight from Canada. I personally believe (based on a small amount of US/Canada market insight) that the reason the industry here in NZ does not collect mortgagee stats is around process for foreclosure.
The US market has a distinct process and procedure that the lenders undertake when a property officially and legally becomes a foreclosure.
In NZ as the primary lender (without re-packed collateralised debt) has a legal relationship with the borrower the process of re-possession and mortgagee sale is an individual one-on-one process without unique process. It is treated like any other liquidation process whereby the bank as the lender instructs the agent to sell the property as they as the now by-default owner seeks to liquidate the asset.
Greetings: Here in Canada, once a lender begins foreclosure proceedings, it becomes a matter of public record. If the mortagee has skipped town, the instition is required to publish the “notice of foreclosure” in local papers. If I as a potential purchaser of a property wants to know the status of title, the vendor is obligated to provide. If they refuse, my attorney can soon find out, and unless proceedings are halted, I have no oblication to go through with the purchase. I can also go personally down to the land titles office and pull a copy of a title to see what if any debts, mortages are registered against it. Regarding the Star Times, sometimes it takes dramatic headlines to create a wake-up call among the “sheeple”. Remember it is better to pay attention to the wolf rather than deny it doesn’t exist. Attention was called to many of the financial issues which eventually brought down the American real estate industry, those crys of “wolf” were ignored too many times and boom!!! Here in Canada we are now experiencing the burst of our own real estate bubble and still there are Canadians willing to deny anything bad can happen to our banks, credit unions, etc. We are also seeing note worthy rises in foreclosures and had better pay attention. The levels of personal Canadian debt is extreme and much of that debt is linked to real estate and inflated home prices. Canada is the largest supplier of energy to America, where the USA goes, so do we, real estate is just one link between our two countries. I would be very interested to find out how many Kiwis have bought property in OZ and how deep into debt they went to do so.
Leonard,
I would be quite confident to say that there would be nobody in NZ who would be in denial to the economic reality. Our economy went into recession at the beginning of 2008 (by official measure of 2 consecutive quarters of negative GDP) – so we are entering the 5 straight quarter of recession. Ours began with a local credit crisis as small players in private finance went belly up taking vast sums of “mum and pop” investor money with them.
The indebtedness of our country is serious, our unemployment is rising and corporate earnings are very sick. We have an unusual situation of the vast majority 90% of banks are Australian owned so our ability to support the banking industry is limited.
I personally (and others will disagree with me) would judge our demeanor to the current economic situation as stoical – we are resilient and confident, we have tightened our collective belts and are ready to ride out this storm which we know will break in the coming 18 months.
Greetings: Is the BNZ Aussie owned, in the majority?
Greetings: Here is an article you may find enlightening.
http://ca.finance.yahoo.com/taxes/article/cpmoney/more-canadians-refinancing-mortgages-pay-off-other-debts-20090128
Leonard
Of the major high street banks (excluding regional banks and saving societies) all are Australian owned – BNZ, ANZ, Westpac, National, ASB. The only exception is our “own” Kiwi Bank which is state owned through the NZ Post operation.
Thanks for the link – smacks a little of using your house as an ATM again!!
Alistair,
Interesting that you know “this storm will break in the next 18 months.” What on earth made you come to that conclusion?
Look I study, trade and deal in the markets 15 hours a day. Things are going to get
much, much worse. Unfortunately most New Zealanders still have their heads stuck in the
sand.
As for Real Estate, of course it’s going to come down (AND A LOT). Expect uenmployment to
absolutely go to the moon and for businesses to collapse left right and centre. If
you have Real Estate and are holding on, forget it ! Get out at all costs before it
drops another 40% and you lose your job during the process. The data coming out of
the US and Eurozone is “brutal” which is what I predicted for 2009. I’m just
hoping we won’t see a collapse of some sort as things are really getting bad out there.
J.C.
I think you will see that the specific paragraph started with a clear view that this was my personal perspective – to which is said others would disagree, clearly you do and I respect that.
My reading of the commentary I listen to through local economists, global publications and business colleagues appears at this stage to indicate that the sense of impending doom is reality for 2009. Within the 18 months timescale I read a view that we will have bottomed out, the future years will be sluggish and to climb back to 4% GDP will take until 2011.
Again – just my perspective. Who really knows? – at least in writing a blog post in February 2011 we can analyse the current situation and review against these forecasts. I hope you will be around then to criticise me or accept that a turning point was reached. Although should the worst yet happen maybe this website will not exist as real estate transactions disappear completely as we all dig caves and hibernte for the coming century!
Alistair
I reckon you should take a close look at all of the 240 or so “mortgagees” on your site and put together some charts and graphs ie many of the mortgagees are units in the same development, lots are sections,many in places like Queenstown, Wanaka etc.
This would give a great perspective on exactly what is up for mortgagee sale, where they are located, price ranges etc.
First need to filter out all the properties that are not actually mortgagee sales but have just used that as a keyword drawcard to the listing! (this shouldn’t be allowed by the way)
It would not take long to put together a decent set of info for the mortgagee sales as there are not that many to analyse.
Ross
As ever useful advice – have a read of the detailed comment I made on Bernard’s video blog on mortgagee listings yesterday (please note minor error – the number of mortgagee listings equate to 0.37% not 3.7% as written.
I will provide an analysis of these mortgagee listings shortly.
The recession will end on 23 October 2011. Thank you William Webb Ellis.
Certainly the psyche of NZ’ers may be vastly improved on that day!
Thanks for the clarification about the 18 month recovery Alistair. Let’s hope you’re right and we’re all dancing in the streets in mid- to late-Dec. I’m glad that it’s simply your “opinion,” and not something that we we “all know” because I personally feel it’s prudent to remain a little sceptical considering we have just been through 10-odd years of super bubble, and the only hangover is a couple of years of mild pain.
Greetings: Here is another article to give you some perspective.
http://www.calgaryherald.com/Homes/Calgary+realtors+leaving+business+amidst+housing/1296721/story.html
Greetings: To those thinking recovery, we have a long way to go. Nothing will happen until the corruption is weeded out.
http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=OBR&date=20090218&id=9620951
[...] For a good response to the story it’s worth reading Alistair Helm’s response at Unconditional. [...]
Greetings: Interesting story from your country here:
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10557491
[...] http://www.unconditional.co.nz/blog/a-frightening-rise-in-mortgagee-sales.html [...]
Come on everyone,this is only the start of it,we are about 6mths behind the rest of the world.Look to the falling dollar and economic data being released!
GreetingsL I would be much interested in your comments on this story, specifically regarding mortage debt.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10558407
Ian
If you judge the timing of the market by the months following peak prices, by my analysis on Zoodle, NZ is 14 months post peak of prices and the UK 18 months post peak – therefore you could say we are 4 months behind.
Leonard
You are clearly an avid viewer of the NZ economic situation!
I was to be quiet honest surprised how this analysis showed a less shocking set of numbers – I am not in a position to comment on other credit applications, however when looking at mortgages the data looks very interesting.
Veda are saying on the July – Dec 2008 period the applications for mortgages were 20% down – over the same period the number of property sales was down 37%. I don’t know though if their stats include applications for re-mortgages or loan changes.
Greetings: I have been to your country many times over the past 30 years, I would guess at least 10 trips. I have family on both islands and have been fortunate to visit parts of the nation never seen by a tour bus. My wife and I hope to return , maybe right after the Vancouver Olympics in 2010. I do have strong reservations about the health of the airline industry, and note Air New Zealand is feeling the pain. I am a strong believer in Peak Oil and see that you are bringing new oil fields into production. I seriously hope this leads to NZ becoming fully self sufficient regarding energy. However if foreign companies get their hands on your resources like they have in Canada your people will suffer. We do not ship Alberta heating fuel to eastern Canada because our free trade with the US gives them first dibs. Therefore imported oil is used in the east while domestic oil crossed the border, to America. A national shame driven by greed. I consider your country to be like Canada all rolled into one smaller package, Mountains, fields, praries, ocean, caves, ice, forest etc, a true paradise without the harsh winter. Not quite sure however how many Kiwis truly appreciate what they have though. I do know many foreigners recognize that; probably why your real estate market in being driven a lot by foreign money. I had a chance to visit a home under construction at Split Apple Rock and another on the hills in Lowery Bay. Staggering amount of money being spent. Begs the question “is it sustainable?” Having OZ control your banks is very disturbing, allows manipulation of financial industry above and beyond that of world markets. The never ending love affair with the car, in a small country where rail and rapid transit would be a godsend, is very disturbing. In Canada our huge distances are a real obstacle but even then we are in the same mindset, the car is supreme. We have ripped up thousands of miles of track and have forced farmers to use trucks to move grain to the nearest railhead, often hours away. Pretty sad. I am posting a link , on breaking story out of Vancouver, should interest you,
http://finance.sympatico.msn.ca/investing/news/businessnews/article.aspx?cp-documentid=18120865
Leonard,
A passionate appeal for NZ to recognise some of the issues that face it’s future – I appreciate your participation. I agree there are parallels especially as our relationship with Australia is critical to our future as we can gain much but potentially lose much.
Your comment on transportation is interesting for whilst we are small in terms of geographical scale as compared to Canada we are a vast country in terms of population density – a country 80% the size of Japan with just 4.3m population means we actually do not have the net worth to build the public transport infrastructure.
Certainly NZ businesses are feeling the pain, however I think we have a very strong culture here of keeping things lean and being multi-taskers which I judge will see us shed less jobs and be nimble to grab opportunities as new ones arise.
Air NZ is a case in point, it restructured over 18 months ago shedding routes and repositioning their whole ticketing / pricing strategy (online dominating and dynamic pricing) this has seen their load factors actually increasing and yes they are making money – not many airlines will be able to report that this year. We will no doubt see the US airlines beating a path to congress again soon closely following the GM / Chrysler teams to seek federal loan – at least they don’t need to hide their “corporate jets”!
Greetings: Alistair says above” we actually do not have the net worth to build the public transportation infrastructure”. I am going to call you on this one Alistar. The massive amount of dollars being spent on motorways indicates differently. Spaghetti Junction is a good example. The amount of land needed for a rapid transit system is far less than for a multi-lane freeway. Elevated rail systems reduce the enviromental impact. I submit the issue is a mater of political will and public acceptance. Petroleum revenues can be shifted away from motorways and on to rail if the public can be educated about the necessity. Focus on rail container traffic between Auckland and Wellington would relieve a lot of pressure on the highway system. With the onset of Peak Oil, air travel will once again become the venue of the wealthy. I can envision resumption of the Wellington/ Christchurch ferry. I also predict a rebulding of your marine coastal transportation system. I think both our countries will see a re-surgance in the ocean liner as air travel decays with high cost of oil in the future. It is certainly possible to load containerized “passenger pods” on a ship heading for OZ, including sleeping berths, and utilities connected into the electrical and water system of the ship. If one is moving between countries, family and posessions travel together,slick eh!! Actually your Inter-Islander already does that.