Record year for forced property sales

The number of forced sales in New Zealand last year reached the highest levels since records began, with an average of more than eight mortgagee sales every day.

The data, released by Terralink International today, showed there were 3024 registered mortgagee sales during 2009. That compared to 1303 in 2008 and 475 in 2007.

Mike Donald, Terralink managing director, said the phenomenal number of mortgagee sales was a clear indicator of the effect of the global recession on New Zealanders.

"In the last two years we've seen the number of mortgagee sales rise by over 500 percent," he said.

"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." Mr Donald said 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 'mums and dad' home owners made up an increasing percentage of owners that were facing a mortgagee sale," he said.

Mr Donald said 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. "That's why we expect it will be many, many months until the number of mortgagee sales drop to pre-recession numbers," he said.

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 with 124.

"The worst affected areas were the regions that include our biggest cities, Auckland and Canterbury. "In 2007 there were 197 mortgagee sales in Auckland, compared to 519 in 2008 and 1274 in 2009. In Canterbury in 2007 there were 45 mortgagee sales, compared to 120 in 2008 and 329 in 2009," Mr Donald said.

The hardest hit smaller regions were Northland up from 28 mortgagee sales in 2007 to 222 in 2009, and Hawke's Bay up from 17 mortgagee sales in 2007 to 131 in 2009.

Mr Donald said he did not expect the number of mortgagee sales to start to decline significantly until at least the last quarter of 2010. Terralink derives its mortgagee sales data from legal registrations of actual mortgagee sales.