The headlines keep reminding us that we are still globally mired in what can be thought of a global economic doldrums. Europe seems perilously close to some form of collapse or at least a “lost decade” and as ever when one of our major trading partner sneezes we tend to catch a cold.
At this time, one of the measures of this – what might be thought of as a long term hangover is mortgagee sales. Those properties where for whatever reason the property owner fails to meet their obligation with the lender and proceedings ensue whereby the lender (in the main, high street banks) seek to repossess the property and auction it off as a “mortgagee sale” to recover the debt owed on the property.
This sector of the NZ property market is a background condition in boom times as well as in bust times, it just tends to be that bust times tend to raise the levels of mortgagee properties being brought to the market. Over the past 4 years this has been very evident as the chart below highlights.
At the peak of the global financial crisis in 2009 the number of mortgagee properties being marketed peaked at over 400 properties in the market and in that year a total of 2,231 mortgagee properties were placed on the market. That compared to just 571 in the whole of 2007 (pre GFC). In 2011 so far 1,535 properties have brought to the market as mortgagee listings by lenders seeking to liquidate the asset.
At this time on the market there are 396 properties being marketed by real estate agents as mortgagee properties. As mortgagee properties are not a defined category our data set relies on the use of the term mortgagee to identify such properties.
As stated this continuing prevalence of mortgagee properties on the market is a bit of a legacy hangover – a legacy we seem unable to shake. Examining year on year data as the chart below shows, the fact is that 2011 is actually worse than 2010 when judged on the perspective of the percentage representation of mortgagee properties on the market as a proportion of all properties being marketed.
The scale of the NZ mortgagee property hangover is though somewhat modest when compared to other countries, most notably the US where still some 3 years after the GFC as a result of the sub-prime mortgage fiasco mortgagee sales (foreclosures as they are called) are estimated to still total 2.1 million properties and by some estimates will take a decade to clear, by comparison NZ mortgagee listings have never represented more than 0.75% of all listings or less than 0.5% of total sales.