15pc fall in forced sales bodes well for 2013
FOR THE first time since the global financial crisis hit in 2007, mortgagee sales are showing a significant downward trend.
Data from Terralink International shows there were 516 mortgagee sales in the third quarter, to September 30, 2012, 15 per cent fewer than recorded for the June quarter.
In the nine months to September, the total number of forced sales was 1645, with a clear and continued downward trend since May.
Terralink International managing director Mike Donald said the latest forced-sale figures were welcome news and finally show a trend back toward pre2007 levels.
‘‘The number of mortgagee sales still remains stubbornly high in comparison with pre-recession figures,’’ he said. ‘‘However, we are seeing an easing of volumes nationally with only a handful of regions experiencing any significant increases in the third quarter of 2012.’’
While last week’s GDP figure of 0.2 per cent quarter-on-quarter growth provided little cheer, other numbers released recently provide some hope for economic improvement in 2013.
Westpac senior economist Michael Gordon even found a silver lining in the GDP number. He said the result was softer than the median market forecast, reinforced by the downward revisions to the previous two quarters.
‘‘However, it was much in line with Treasury and RBNZ [Reserve Bank of New Zealand] forecasts, and certainly fits with the widespread view that Q3 [quarter three] will mark the low point in growth for the year.’’
Gordon said if 0.2 per cent was the lowest that quarterly GDP gets, that bodes well for some strong growth to come as the Christchurch rebuild gathers pace.
Indeed, even with a 0.2 per cent quarter, annual average growth rose slightly to 2.5 per cent, the highest since the first quarter of 2008.
Construction was a lonely highlight in the GDP statistics. That was backed by Statistics NZ building consent numbers released this month which showed a 9.6 per cent lift in the volume of building work in the September quarter, with Canterbury and Auckland leading the way.
The ANZ Truckometer Heavy Traffic Index, meanwhile, which gauges the amount of transport activity, has rebounded from a lull to grow again during the past two months. It rose 1.4 per cent in November, seasonally adjusted, and 4.4 per cent in October.
‘‘Lifts in both [Truckometer] indexes in the past two months suggest an inflection point may have been reached,’’ ANZ commented.
In addition, KPMG’s Financial Institution Performance Survey shows overall profits up 14 per cent to $235 million this year.
However, while it is never a leading indicator, unemployment remains persistently high at more than 7 per cent.
Manawatu and East Cape stand out as the regions with the largest increases in mortgagee sales quarter-on-quarter. Sales in Manawatu increased by 28 per cent and the East Cape Auckland -14 percent Waikato +3 per cent Northland -16 per cent Wellington -25 per cent Canterbury +3 per cent region jumped by 137 per cent.
By contrast, Taranaki (down 38 per cent), Wellington ( down 25 per cent), Otago ( down 28 per cent) and Bay of Plenty (down 55 per cent) all experienced marked drops.
The proportion of ‘‘Mum and Dad’’ property owners (with only one property) facing mortgagee sales has also dropped slightly from 22 per cent in the second quarter of 2012 to 20 per cent in the third.
Donald said it was always hard trying to pick a trend from the forced-sale data, ‘‘but this is all heading in the right direction – down’’.
Donald said that for most New Zealand property owners, the latest data suggested that pressure was finally easing.
For professional property investors, however, the news was not so good. Donald said there was a noticeable rise in forced sales among investors with more than 11 properties as banks take a harder look at the risks they are exposed to on highly-leveraged portfolios.
New Zealand Bankers’ Association boss Kirk Hope said mortgagee sales were always the last resort for banks.
‘‘It’s not in anyone’s interests that they occur,’’ he said.
‘‘Banks work very hard with customers who find themselves in financial difficulty.’’