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Recovery? Mortgagee home sales now 1 in 20

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  • Recovery? Mortgagee home sales now 1 in 20

    Recovery? Mortgagee home sales now 1 in 20

    Lois Cairns - Sunday Star Times Last updated 05:00 27/09/2009

    CONSUMER CONFIDENCE may have reached a four-year high and the recession may technically be over, but record numbers of Kiwis are still being forced out of their homes because they cannot pay the mortgage.
    Figures released exclusively to the Sunday Star-Times show that one in 20 houses sold in July changed hands in a forced sale.
    Across the country, 321 mortgagee sales were recorded in July up from the previous month's record of 289.
    The figures released by property and land information company Terralink show that in the Auckland region alone, 144 mortgagee sales were recorded 35 more than across the whole of New Zealand during the same month last year.
    Already this year, the number of mortgagee sales (1809) has overtaken the number of sales (1304) recorded last year.
    Terralink managing director Mike Donald said most of those being forced to sell their homes were investors, although family homes accounted for 18% of the July mortgagee sales. Another trend to emerge from the July figures was the growing proportion of mortgagee sales being driven by the banks rather than finance companies.
    "Obviously the second-tier finance companies got hit hard early on. They were forcing the majority.
    "They still are forcing the majority but the major banks are... forcing more and more properties into mortgagee sale."
    Donald expected the volume of mortgagee sales to remain high for some time.
    "The effects of the recession are going to be felt by many for years to come. While we may possibly have hit the peak in terms of actual monthly numbers of mortgagee sales, the numbers continuing will still be at far higher levels than pre-recession. We would expect that to continue for another year or 18 months."
    Last week Finance Minister Bill English said the economy was "through the bottom of the trough and is stabilising". His comments came as gross domestic product figures revealed the New Zealand economy had narrowly avoided a sixth straight quarter of contraction (but only just it grew 0.1% in the June quarter) and the Westpac McDermott Miller consumer confidence survey revealed consumer confidence had leapt to a four-year high.
    However, economists are warning the recovery will be fragile in its early stages and only gather momentum next year.
    BNZ chief economist Tony Alexander said that although the economy was improving, it was not a boom so consumers should not plan on great increases in their incomes.
    The housing market though would continue to rebound. According to the Real Estate Institute's latest house-price index, prices have steadied, rising 1% on a monthly basis, 2.2% in the July quarter, and 0.9% in the past 12 months. Sales volumes have also been rising.
    A recently released report by economics researcher Infometrics suggested the median house price next June would be 11% up on June this year. In three years, a rise of 24% is expected (17% when adjusted for inflation).

    Alexander: "There are four strong elements in play here which easily explain why we've seen prices rise 6% since January. Number one is that we have a wee bit of a shortage of houses in New Zealand and not the huge over-construction of Spain, Ireland, the UK and the US. Number two is we've got the lowest floating
    rate borrowing costs in four decades... Thirdly, we have the weakest level of new house construction in four decades. And fourthly, population growth is accelerating with net migration gain now at almost 16,000.
    "You put those fundamentals together and it screams prices are edging up. The shortages of listings we have seen emerge from a few months ago backs up the anecdotes of every man and his dog showing up at open homes again."
    Westpac senior economist Donna Purdue said that in the June quarter consumers appeared to lack conviction that a recovery was on its way. "Now, there is no doubt. Consumers, regardless of age, income group, gender or region, are convinced that better times lie ahead."
    That will be cold comfort, though, for the thousands of New Zealanders who have already lost their homes. In the Wellington region, 26 mortgagee sales were recorded in July (up from 22 in June) while within the Auckland region, the central city had 49 sales, Manukau 32, North Shore, Rodney and Waitakere 17 each, Franklin seven, and Papakura five. Canterbury bucked the trend, dropping from a high of 35 in June to 24 in July. Mortgagee sales in the Waikato region fell from 29 to 25.
    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

  • #2
    And a slightly different slant:

    "Jobs market drives mortgagee sales

    ANZ chief economist Cameron Bagrie says he is not surprised there were 321 forced sales in July this year

    27 September 2009
    A tough jobs market is one reason for the big increase in mortgagee sales.

    ANZ chief economist Cameron Bagrie says he is not surprised there were 321 forced sales in July this year - roughly one in every 20 house sales. That figure, from Terralink, is well up from the 109 at the same time last year. Mr Bagrie says it is a reflection there is still a fair bit of pressure on the investment market.

    Mr Bagrie says a many people have bought residential investment properties on yields of around 3 or 4 percent. If they are borrowing at around seven percent, they need capital gains to make the investment work."


    3 or 4 percent - yikes!
    Mind you when I saw how many experts were advertising over the last few years fee-charging seminars on how to lose money in property investment, I can see how the gullible would have been sucked in.


    • #3
      I'm always on the look out for more investment property and subsequent to that, I have got very adept at asking questions of the REA's, getting their "take" on the property.

      You would be amazed (or possibly not) the number of REA's who say "This is a great investment!! If you put an offer in at $X's, the vendor would be really interested".

      "Why is it a good investment at $X's?"

      "Oh, because you can rent it out at $X's/week".

      "And? That figure doesn't cover the mortgage, rates, insurance, maintenance. I'll be out of pocket by $x's/week".

      "Yes, that may be true but it's still a great investment".

      W..... T..... F.....

      It's not so much about the market price of the property, but the sheer stupidity of REA's when they come out with dribble like this. And novice speculators just lap it up.

      This example is why companies like RM mislead people. It only showed the most positive, unrealistic scenario to gullible speculators. The figures always looked good on paper. They'd hold those *cough* seminars and people would leave wound-up and enthused and buy anything and everything that was listed, without due regard to job redundancy, one income, market downturn, rates rises, vacancies etc.

      Any combination of these is why there is a rise of mortgagee sales.
      Patience is a virtue.


      • #4
        I totally agree, Essence.
        As soon as you see or hear the phrase "A tax efficient investment" run, don't walk, for the door.
        It means "This will lose you money".


        • #5

          Not that I blindly believe the propaganda from here, they do present some analysis. Mind you the SST is usually full of rubbish anyway....Judging by the way circulation is declining many concur.

          Agree with you Essence.