The headline from the Sunday Star Times leads with the emotion line of a “growing number of kiwi homeowners are facing the prospect of handing over their keys, with mortgagee sales now accounting for one in 25 property transactions“. Certainly the level of mortgagee sales is continuing to rise with the complete data of the Terralink Mortgagee Sales Report available on Zoodle.
April mortgagee sales reached a new high of 251, up from 201 in March and up from just 90 a year ago.
At the same time, and has been reported here previously the listings for mortgagee properties as featured on this website have risen over the past 2 years. Back in April there were 336 listings on the site which were being presented by agents as mortgagee sales, today there are 391 properties on the market.
The past 3 months has seen some plateauing in the number listings featured on the website with the peak of 423 recorded back in November, that level dropped coming into Christmans before peaking again in February with 412 listings.
A can be seen from the chart it would appear that the stock of listings seems to be pretty stable at around 350 to 400 at any one time.
The key statistics though is not so much inventory it is the number of new listings coming onto the market. This is because by their very nature mortgagee properties have an urgency and do not stay on the maket very long. In fact a property forced into mortgagee sale in June would be marketed in July and usuually completed in August thereby creating a 2 month window between listing and sale.
For this reason it is valuable to examine the correlation between new listings of mortgagee properties and the sales data of mortgagee properties. The data presented in the chart below presents actual sales of mortgage properties in the month they are recorded by legal transfer. The data for new listings is actually shown with a 2 month lag. So the reported sales for April are shown against the number of new listings of mortgagee properties that were added in February of this year.
With the clear correlation between sales and listings it is possible to be with some degree of certainty able to cast a future view of mortgagee sales in the coming months. This correlation would certainly indicate that the next 3 months could well see sales in the vicinity of the 250 per month with potentially quite a significant increase in the number being sold in July.
This representation is felt to be a more realistic view than that presented in a similar blog post a month ago which using just inventory data with a one month lag anticipated that mortgagee sales may have peaked. I concede that the interpretation and extrapolation of data in this industry is not an exact science and I am not an academic!
It’s still only a trickle relative to other countries, but those who had predicted this level of mortgagee sales a few years ago would have been labeled a stark-raving nutter. It’s amusing that we now quip that “it’s nowhere as bad as the U.S.”, which is like saying “at least we didn’t plan that WTC trip on Sept 11, 2001.”
Interesting to note that house prices in Australia are tipped to rise in the latest figures coming up tomorrow. Seems like record immigration, low interest rates, govt subsidies, and tight supply is the key to a recession-proof property market.
J.C.
You are right – the latest data from the US still looks like 40% are foreclosure and the bottom has not been reached in some pockets of the US where the downwards spiral continues.
As to Australia – they have certainly adopted the strategy of stimulating the housing market with first time buyer grants at both state and federal level. It is clearly working to sustain the market – the difference I guess is the Australian economy’s ability to pay for it all.
The Australian “economy’s” ability to pay for it all or the Australian taxpayers’ tolerance for punishment? It’s really a form of socialism more than anything else. In the future, it will take a massive boost to incomes and productivity to sustain (in the absence of foreign investment).