The front page story of the NZ Herald highlights the anguish and horror of the impact of mortgagee sales upon the owners of properties reprocessed by the mortgagee – in this case the bank. Behind the headline is the statistics that the scale of the mortgagee listings being brought to the market to be sold on behalf of the owner by the bank or other lender is on the way down.
At the peak of the financial crisis the number of properties being marketed as mortgagee sales hit 423 across the country, that was back in November 2008, today that number is 216. Currently around 30 properties a week are marketed as mortgagee sales, and given the financial imperative of the bank or financial institution the properties tend to sell fairly quickly seeing properties not hanging round long on the market.
The chart below updates the last 5 years of data and graphically shows the steep rise at the start of the global financial crisis and the slow steady recovery since then.
In real terms each property put up for mortgagee sale is a human story about over leveraged financial management, but in absolute terms the number of mortgagee properties in NZ remains relatively low when judged against the property market in general. At no time over the past 5 years has the number of mortgagee properties on the market in NZ ever exceeded 1% of all properties being marketed – at its worst mortgagee properties represented just 1 in 132 of the properties on the market. Compare that to the US where although things are looking brighter the story a year ago from Bloomberg showed 3 million homes foreclosed since the start of the crisis (for reference US house sales are around 4 million a year).
One way to evaluate the current tracking of mortgagee listings in NZ is as shown below matching week by week for the past 5 years the % of mortgagee listings of the total of all listings.
This chart tracks in red the current year and shows that weekly this year is looking to be at a similar level to 2010, far lower than the worst year of 2009 and down on last year. The reason for the somewhat higher level of listings last year could well have been as a result of banks looking to liquidate their repossessed properties as the property market began to regain life and activity.
One noticeable trend within the data of mortgagee listings is the split between the major metro areas of Auckland, Wellington and Christchurch and the provincial ares of the country.
The blue line tracks the listings in the major cities with the red showing provincial areas. As the financial crisis hit the early impact was seen in the cities (potentially in the area of apartments and investment properties) whereas as time has gone on the provincial areas have actually been creeping up and have in the past 3 months overtaken the cities to represent a higher percentage of current mortgagee properties on the market.
This week the region with the highest proportion of mortgagee properties is the Hawkes Bay where there is one mortgagee property for ever 123 properties on the market (0.81% of all listings) – a total of 17 properties; by contrast Taranaki, Nelson, West Coast and Otago had just one mortgagee property each on the market.