Mortgagee sales have hit a post-Covid high, according to new data released to OneRoof.
Analysis by property insights firm CoreLogic found there were 189 mortgagee sales in the 12 months to the end of June this year – up 81% on the previous 12 months and more than triple the tally for all of 2022.
Even though interest rates have started to fall, industry experts told OneRoof they expected mortgagee sales to rise.
CoreLogic chief economist Kelvin Davidson said the increase reflected the financial pressure on homeowners following the rapid rises in interest rates and inflation post-Covid.
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“People can only hold on for so long,” he told OneRoof. “And now you’ve got job losses in the mix too. I don’t think mortgagee sales have peaked just yet.”
Financial pressure has hit the top and bottom end of town in equal measure. Among the mortgagee listings on OneRoof is a luxury four-bedroom home on one of Auckland’s best streets.
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The property at 27 Palmer Crescent, in Mission Bay, has a CV of $4.4 million and last changed hands in 2018 for $2.95m, according to OneRoof records. The house had been on the market multiple times before the mortgagee put it up for tender at the end of last month.
Another high-end mortgagee sale is 340 Whitford Road, a “secluded country estate” with two homes on a 4.3821ha section. The property has a CV of $3.6m and last changed hands for $1.75m in December 2015, according to OneRoof records.
Other Auckland properties subject to forced sales include a two-bedroom Orakei apartment connected to high-profile property investor Nikki Connors, an Otara do-up, and a string of terraced houses in Panmure.
Inside the luxury home of 27 Palmer Crescent. The current listing doesn't show the interior but photos from previous campaigns show it has a high spec finish. Photo / Supplied
An apartment in Auckland's Orakei has been put on the market for sale by the mortgagee. Photo / Supplied
Ray White Manukau co-owner Tom Rawson said there wasn’t one particular type of property owner that was vulnerable. Everyone from owner-occupiers, investors, developers and “everything in between” was feeling the financial strain.
He said owner-occupiers may have suffered a change in circumstance such as losing their jobs, investors may have over-stretched themselves, and developers may have been wrong-footed by rising interest rates.
His South Auckland-based agency works with a lot of property owners who are feeling financial pressure. He said they often sold before being forced to by their bank. Sometimes the money they got was only enough to pay off the loan.
“People have been very aware of the financial situation they are in and the cost of money and there’s a lot of people who are ‘beating’ the bank,” he said. “They’ve lost their equity, but they are clearing the bank debt and the bank obligation.”
Rawson thought more mortgagee sales would trickle through, but said the number of forced sales was nowhere near as high as people had been expecting, given the tough market and higher interest rates.
CoreLogic chief economist Kelvin Davidson says mortgagee sales have yet to peak. Photo / Peter Meecham
Davidson noted that the current volume of mortgagee sales was nowhere near the 2637 reached in 2010 after the Global Financial Crisis. Borrowers’ attitudes had changed since then, he said, and that falling interest rates would provide some relief.
Wayne Shum, senior research analyst at OneRoof’s data partner Valocity, said it took time for the full impact of a downturn to work its way through the system.
Usually all the other options such as paying interest only on the mortgage for a year or attempting to sell even at a discount to repay the loan had been worked through before the lender forced a sale, he said.
“There is still some pain to work through the system; the RBNZ estimates that unemployment (currently 4.6%) will be in the early 5% range throughout 2025 before coming down in 2026.”
Shum hoped buyer demand would pick up during that time so that struggling owners could sell it themselves instead of being forced to.
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