From the latest data it looks like the peak of mortgagee listings could be behind us. As at this time there are just under 300 listings on realestate.co.nz (lifestyle and homes for sale) that are being marketed as mortgagee sale.
Peaking in early 2009 at over 400 listings, the trend of decline began in the spring and continued right through to Christmas when there was a clear-out of unsold mortgagee properties which resulted in the stock level falling to less than 200. January and February has seen the number of listings pick up again, however the rise is a seasonal lift rather than an underlying increase.
The chart below shows the number of listings in absolute terms and also as a percentage of all residential listings. To be clear these statistics comprise residential and lifestyle property and exclude sections.
The number of listings as a percentage of all residential listings is key as the past few weeks has seen a significant increase in new property listings coming onto the market – in some extent a flood of new listings. The current level of mortgagee properties is less than half of one percent, that is just one property in every 200.
Matched to this decline in listings is a steady decline in the search enquiry for mortgagee listings. Over the past 6 months the number of search enquiry for the keywords of “mortgagee”, “mortgagee auction” and “mortgagee sale” has steadily declined. At one time over 1 in 10 searches were for these keywords – the past 3 months has seen this drop to just 6% – just over 1 in 18 of all keyword search queries.
The chart below tracks the past 2 years of the number of mortgagee keyword searches as matched to the number of mortgagee properties on the market.
I wonder where we are at
http://www.moneyweek.com/investments/property/~/media/MoneyWeek/2009/091102/09-11-05-MM05-bubble-stages.ashx?w=450&h=356&as=1
Andrew
Great to hear from you – can I ask you to share your view of where you think we are on this graph?
I think that we are just passing “return to normal”
The graph seems more suited to the share market as property values are much more ‘sticky’ on the decline. I believe that we will be on a protracted and gradual decline in values whilst incomes catch up and property becomes more affordable and closer to cash flow positive as an investment vehicle, all depending upon what happens with immigration. I doubt that we will see another 02-07 style bubble for a while.
Had the reserve bank not reduced the OCR to 2.5% at the time and speed that they did, and the government actually took away the tax advantages, introducing a capital gain/land tax etc, we may have seen a different scenario.
There are a few properties in Gisborne that are close to becoming cash flow positive investments and as soon as they do i will buy.
Andrew,
I personally agree with you on the difference between the share market and the property market and the fact that 2008/9 saw a seller / buyer behaviour that ensured that the correction was less severe than the theory would have anticipated.
I think we are already seeing the effects of a very different scale and dynamic of real estate which will exist at a lower level of transactions with far less speculation, and as a consequence price changes may well lag inflation which over the longer term will redress the affordability issue.
I think this market (Gisborne) is actually on the rise. Twelve month Medians rose 6% over 2009. I feel that the market values have risen the similar level. Lower end properties are sitting at the moment as investors are not making many moves. Great time to buy…
[...] The early months of 2010 will be interesting to observe as the level of listings of mortgagee properties as tracked on realestate.co.nz has been falling for the latter quarter of 2009 and whilst picking up in the January again seems to indicate that the peak certainly in terms of new listings may well be behind us. [...]