End to Auckland mortgagee sales surge 'some years off'

Photo / Greg Bowker.

More than a thousand Auckland homeowners lost their houses in a mortgagee sale last year, an increase of nearly 550 per cent since 2007.

Data released by Terralink International yesterday show there were 1274 registered mortgagee sales in Auckland during 2009, up from 197 two years earlier.

Nationwide, the number of mortgagee sales - where a borrower's property is sold by the lender - reached the highest levels since records began, with an average of more than eight mortgagee sales every day.

The worst-affected areas were Auckland and Canterbury.

Mike Donald, Terralink managing director, said Auckland's large stock of apartments was a possible reasons for the high numbers.

But he said homeowners of all walks of life had been affected and forced sales had hit baches, first homes and Remuera mansions alike.

"We found out it was across all socio-economic groups, and up and down the country."

The data showed there were 3024 registered mortgagee sales in New Zealand during 2009. That compared with 1303 in 2008 and just 475 in 2007.

Donald said the sales were a clear indicator of the effect of the global recession on New Zealanders.

"In 2008 the number of mortgagee sales rose sharply, but 2009 has seen even those record numbers double. Property owners are hurting, there were over 50 forced sales every week last year."

Donald said he did not expect the number of mortgagee sales to start to decline significantly until at least the last quarter of this year.

He said that before the recession, there were only about 30 mortgagee sales a month

"I don't think we'll get to those levels for some years to come."

Donald expected any tax changes that penalised property owners would increase the numbers.

Initially it was properties owned by overstretched investors and development companies that made up the bulk of mortgagee sales.

"As the recession deepened, servicing multiple mortgages or gaining continuing access to credit became harder or impossible, and these owners were forced to sell.

"Later, as unemployment began to rise, we saw individual property owners increasingly feel the pinch. These owners, often with only one property or what we think of as 'Mum and Dad' home owners, made up an increasing percentage of owners that were facing a mortgagee sale."

A mortgagee sale was often the last resort after a whole chain of events such as a job loss, loss of investments, or reduced cashflow in small businesses.

September 2009 saw the highest number of mortgagee sales, 343, since records were first kept in 1994. The fewest mortgagee sales in 2009 were in February, at 124.

Terralink derives its mortgagee sales data from legal registrations of actual mortgagee sales.

Forced to Sell:

Mortgagee sales (2009 | 2008 | 2007)

Auckland City: 387, 161, 86
Manukau: 323, 147, 26
North Shore: 173, 65, 20
Rodney: 155, 56, 19
Waitakere: 135, 54,31
Papakura: 53, 19, 7
Franklin: 48, 17, 8
Total: 1274, 519, 197

- NZPA, staff reporter