Mortgagee Sales on the Rise

Last week I spent a number of days in Christchurch checking up on the market conditions and many other things in preperation for part or all of my family moving there soon. As stated in my previous post
I was quite taken back by the Christchurch Market to how different it is compared to New Plymouth and also the rest of New Zealand.
When going around various agencies I noticed a trend of how many mortgagee sales there were in many of the offices. Harcourts seemed to be doing most of them and have set two seperate auction days just dedicated to mortgagee auctions. I proceeded to do some research and found a rather interesting article that I really thought I should share with you.

The number of mortgagee sales in Canterbury is still on the rise, providing rich pickings for property hunters.
Most major real estate websites are advertising higher numbers of mortgagee sales than in the past and mortgagee auctions are becoming increasingly common.
A mortgagee sale is the sale of a property by the financier or lender due to default, such as non-payment of the loan.
In New Brighton, prime beachfront land on Marine Parade is listed under this category, along with a number of almost new apartments directly opposite the beach and the pier.
In other areas of the city, the old historic Dorothy’s Hotel overlooking Latimer Square is listed as mortgagee, along with two partially completed townhouses in Merivale, a number of apartments in the Parkbridge complex near Hagley Park, and sites in a hilltop subdivision in Cashmere.
According to the national realestate.co.nz website, there are currently 40 properties from a total of 6362 listed as mortgagee sales in Canterbury.
Harcourts sales and marketing consultant Megan Didham, who is selling the land on Marine Pde, said in that case it was a developer who “has just leveraged far too much and simply can’t continue”.
It was a similar scenario for many mortgagee sales, said Ms Didham.
“A number of developers, and Mum and Dad speculators who were buying up property in multiples over the last few years, hedging that our property market would sustain the increasing values we have had over the last six or so years, were often leveraging equity against other properties and assets,” she said.
“All the while banking on their ability to turn that property over again while financing their holding costs, but this just simply hasn’t paid off.”
The chief executive of www.realestate.co.nz, Alistair Helm, said while data was not as readily available for Christchurch, the national picture indicated a significant increase in mortgagee sales.
“At the moment, we have over 300 homes identified as mortgagee sales on our website – compared to 65 this time last year,” he said.
“But to put it in context, that is 300 listings out of a total 53,000.”

 
Mr Helm said the number of people searching for properties under this specific criteria was also increasing.
“For example this time last year there were 750 people a month consciously typing the keyword mortgagee sale when searching on the site.
“This has increased to about 3000 a month now.”
Canterbury Property Investors Association president Paul Kinley said the mortgagee trend was by no means abating, and had been evident for the last year.
“People are being squeezed all around really, and the people who have bought property in the last two years are the ones that are hurting.”
Avon Realty First National office manager Jeff Hill agreed, adding it was “a real shame”.
“When times get really tough like this, and if people have over committed themselves then they can get into strife, and it is not good,” he said.
“I guess that is why the banks are tightening up on lending 100% mortgages, and are now starting to say we need a minimum 20% deposit to avoid such situations.”
Mr Hill said there were two sides to the coin, however, with the market looking increasingly attractive to first home buyers with savings in the bank.
“With mortgagee sales there are obviously going to be lower sale prices, and it is the perfect time for first home buyers coming into the market.
“It is the whole yin and yang situation – yes, we are seeing more mortgagee sales, but then we are also seeing more people buying at a great price.”
Source Star Canterbury
 

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