Thousands of Kiwi homeowners are trapped in their houses because of negative equity created by the property bubble bursting - and they're being told they need to hold on for a while yet.
In 2007, it was estimated about 40 per cent of first-home buyers were taking out 100 per cent loans.
Mortgage broker Kris Pedersen says they made up a large chunk of the lending he did between 2006 and 2008.
"If it was at the beginning of 2006, they probably would have gained equity but for borrowers in 2007, a large number would be in negative equity now. It would be thousands."
He says some borrowers were taking out loans of up to 110 per cent of their home's value and 100 per cent for investment properties.
Property prices in Auckland are still 5 per cent down on their peak. And BNZ chief economist Tony Alexander says it will be next year before there is a significant accelerated upturn in the market.
One expert says homeowners should stay in the property until the market bounces back as it is the only way to make sure they don't take a loss.
David Whitburn, president of the Auckland Property Investors Association, says if people can hold on, they should.
"If they own a property and have gone through a period where they have experienced a loss, as surely as night follows day, the price will eventually lift."
People who know they want to sell but aren't sure when should try to get an understanding of the economic activity in their area and the way property cycles work. "Knowing when to bail is one of the hardest things," he says.
Prices in the smaller towns are often affected by the actions of key employers and property owners in cities can get information on the economic outlook from banks' chief economists' reports.
Richard Waalkens, a registered financial adviser at Mike Pero Mortgages, recommends getting an expert opinion.
"People should seek advice from a valuer to get an understanding of what a property is worth and what it could be worth in an improving market in a couple of years' time. But it is crystal-ball gazing."
Blair Watson, of real estate firm Kellands, says property owners are weighing up whether it is the right time to sell. "You can never predict the market but you can get a feel for how it's going and the possibility of growth in the short term."
At Beaumont Quarter in central Auckland, a large increase in ground rent pushed many owners into mortgagee sales. Others were able to pay to buy the lease on their properties but were left in negative equity and others had a chance to sell to people who would freehold them.
The number of mortgagee sales pushed the market value of all the units down. "It was the worst time to be selling so I advised owners to hold on if they could because I could see the market improving within 12 months," Watson says.
But Watson believes sometimes it is worth getting it over with. "Do you need the money freed up? Do you want to get the monkey off your back?"
The decision to sell is also affected by people's ability to borrow again to buy another property. Waalkens says people need to evaluate their total statement of position and how that will affect their future borrowing.
He says it is no use coming out of a sale with a personal loan if you want to immediately buy another property. "It just won't happen. [Look at] your ability to repay debt and save a deposit."
Kiwibank spokesman Bruce Thompson says in some cases a bank will transfer the existing mortgage to a new property if the buyer can stump up the deposit for the new house.
If buying again isn't an option, renting out your property and becoming a tenant in another could be a solution.
Whitburn says many people become property investors after being "accidental landlords" who rented out their properties because they couldn't get the price they wanted for them.
"They hold on to their property, maybe buy another one, then the prices lift and they buy another one."
Thompson agrees renting is a good option. "Rent out your property and rent yourself at a level at which you can contribute to the mortgage and pay down the debt.
"Once you're back in the positive, you can make a decision to sell or carry on because you're making money."
Thompson says the most important thing is to get the bank involved early. Banks have options available, such as repayment holidays, interest-only loans and extensions of the mortgage term to help people in financial difficulties.
He says banks will not view someone in negative equity badly because the situation is out of their control.
"If property values move against you or in favour, it's just what happens."
A monkey off his back
Alex Lawson decided to sell his property, despite knowing he would take a hit on the price, because he had started a business and needed to free up the capital to invest in it.
"Although the market was softer than when we had bought, we had made some improvements to the grounds of the property and it was a desirable house so we were confident we would be able to sell," Lawson says.
He says the price paid by the buyer was what he expected.
"We took a slight loss but it was within what we had been expecting after discussions with local agents."
He says finding people interested in the property wasn't difficult.
"It was a great property, in a desirable area, but getting people to actually bid was the hardest part."
He says he doesn't regret the decision to sell, despite getting less than he and his wife originally paid for the house.
"It allowed me to start the business which is doing well and we're both happy to be in the position we're in now."