Analyst shares latest insights
The number of mortgagee sales has doubled year-on-year, according to property listings website Trade Me.
Acknowledging that the portion of mortgagee sales to total listings remains at less than 1%, a property coach puts the increase down to a backlog of mortgagee and bank ordered sales which accumulated during COVID-19.
Following the 0.50% rise to the official cash rate in April, National deputy leader and finance spokesperson Nicola Willis warned of more financial pain ahead.
Willis summed up the April cash rate rise for mortgaged homeowners as “the punch that sends them off the edge” into mortgage arrears, unwanted house sales and financial distress”. According to Centrix data, 18,900 mortgages were past due in February, up 23% year-on-year.
Trade Me Property spokesperson Gavin Lloyd (pictured above left) said that the number of properties listed onsite as a mortgagee sale remained “very small”.
He told NZ Adviser that there were 29 residential properties listed on Trade Me as a mortgagee sale on Thursday.
“We have over 36,000 properties for sale, meaning they make up fewer than 1% of all property listings,” Lloyd said.
However, the total portion of Trade Me sales had doubled year-on-year, he said.
“In March, we saw a 100% increase in the number of properties listed as a mortgagee sale onsite. However, it is important to note this is a very small number of listings,” Lloyd said.
Given the low proportion of mortgagee sales to total listings, Lloyd said it was too soon to tell if mortgagee sales were a growing trend.
Putting the numbers into perspective, property coach and investor Steve Goodey (pictured above right) agreed that at 0.08%, the portion of mortgagee sales to total property listings was low.
The annual lift in mortgagee sales over March could be a result of banks resuming their normal processes following COVID-19 (when relief measures such as a six-month mortgage holiday, were available), he said.
“What we are seeing now is the market working its way through a ‘backlog’ of both mortgagee and bank ordered sales,” Goodey said.
Even if the number of forced sales doubled a few more times (e.g. to 120 nationwide), he noted that they would still only represent 0.3% of property listings.
Trade Me’s latest Property Price Index showed that the national average asking price for properties nationwide dropped to $870,550 in February, down 9% year-on-year.
Data showed the steepest annual falls were in Auckland (down 11.7%) and Wellington (down 12.2%), however average asking prices also dipped in the Canterbury, Nelson/Tasman and Waikato regions.
Despite declines in property prices reported across most areas of the country, Goodey said he was not seeing an increase in first home buyers and/or investors entering the property market.
He pointed out that the number of days to sell properties had increased year-on-year, while prices were up to hundreds of thousands of dollars lower than last year.
“Housing in New Zealand will never be any cheaper than it is this year,” Goodey said. “If an investor or first/next home buyer purchases now, they will [pay around] a 7% interest rate but will probably have $300,000 less debt than if they had purchased 18 months ago.”
Noting that the 25-year average mortgage interest rate was 7.25%, Goodey said that it was reasonable to expect that interest rates would rise and then fall, meaning today’s buyer would owe significantly less money than if they’d bought at the height of the market.
A spokesperson for Kiwibank said mortgagee sales were a "last resort option". Before a mortgagee sale, the bank said it takes "numerous steps" to help a customer pay their mortgage.
It's customers have access to home loan calculators, budgeting tools and independent experts who can help.
"Our number one point for customers who find themselves in the situation where they have not paid their mortgage, is to get in touch with us as soon as possible," the Kiwibank spokesperson said.
"We can talk through each customer's unique situation and work through possible steps to avoid a sale."
