Forced property sales in New Zealand are more than four times higher than a year ago as the impact of the global downturn hits vulnerable real estate owners harder than expected.
Although New Zealand has not been immune from the global property downturn it was expected not to end up with a major repossession problem.
But it is unemployment that it taking a toll. The Auckland market has been particularly badly affected where the sheer volume of residential housing in the city, high median house prices and people being laid off are being cited as factors in the forced sales increase.
Figures issued by property and land information company Terralink show a 25% increase nationwide in the past month, with 251 mortgagee sales recorded - the highest monthly total ever. Five years ago there were around 45 mortgage sales a month.
Analysts at Terralink do not expect the trend to slow down as forced sales tend to lag behind the wider economy. Figures have been rising steadily since March 2007 when the impact of the global downturn first started to hit the New Zealand property market but they have accelerated in recent months. Terralink's managing director Mike Donald said that more individual property owners were losing their homes and he believes it is a direct result of increasing unemployment and small businesses making less money, leaving their owners struggling to pay bills.
Banks had tightened their lending conditions because of the recession, which also made it harder to meet mortgage payments, he added.
Donald said Auckland had been hit the hardest because property prices were higher and because many of the mortgagee sales included complexes where apartments and units were being built but not completed. Almost half the forced sales are in Auckland.
Auckland also has an oversupply of apartment accommodation and several large-scale complexes remain unfinished as property developers going into liquidation or receivership.[Property Wire News]