Fall in mortgagee sales welcomed

By Martin Johnston

Economist says drop is a sign economy improving but puzzled it comes at a time when unemployment rising.

Bill Rosenberg said that the unemployment rate remained a big worry and there was still weakness in the economic growth data. Photo / Supplied
Bill Rosenberg said that the unemployment rate remained a big worry and there was still weakness in the economic growth data. Photo / Supplied

The decline in mortgagee sales of residential properties has been interpreted by a bank economist as a welcome sign of an improvement in the economy.

Data published by Terralink showed there were 516 mortgagee sales from July to September. That was 91 (or 15 per cent) fewer than in the April-June quarter.

Terralink said the reduction in mortgagee sales - forced sales by banks and other lenders - in the September quarter marked "a significant downward trend for the first time since the global financial crisis began in 2007".

"The number of mortgagee sales still remains stubbornly high in comparison with pre-recession figures," said managing director Mike Donald.

"However, we are seeing an easing of volumes nationally with only a handful of regions experiencing significant increases in the third quarter of 2012."

The ANZ bank's chief economist, Cameron Bagrie, said of the September quarter reduction: "It's a signal the economy is getting better. If there's a bit of a puzzle I've got at the moment, it doesn't tie in with the official unemployment rate numbers.

"The unemployment rate has been rising over 2012 and we've got housing statistics going in completely the opposite direction."

In November, Statistics NZ said that based on the Household Labour Force Survey the seasonally adjusted unemployment rate rose 0.5 percentage points in the September quarter, to 7.3 per cent.

Mr Bagrie said the economy was producing contrary data - "good one month, bad the next, but there are more ticks than crosses on the ledger.

"Things are getting better out there; it's not universal, it's not across the board."

Council of Trade Unions economist Bill Rosenberg said there was a significant time lag to a mortgagee sale from when the home owner first got into financial difficulty. "So it is quite difficult to say that there is a trend there yet."

He said the unemployment rate remained a big worry and there was still weakness in the economic growth data. "There are a lot of mixed indications of where the economy is moving."

The Terralink data shows the Auckland region had 137 mortgagee sales in the September quarter, down 14 per cent from 160 in the June quarter.

Bay of Plenty, Wellington, Taranaki and Otago had reductions ranging from 25 to 55 per cent.

Manawatu had a sharp increase (28 per cent) and the East Cape region increased sharply from eight mortgagee sales in the June quarter, to 19 in the September quarter.

Distressed home owners

Number of mortgagee sales of properties from July to September:
*112 in 2006
*905 in 2009
*516 in 2012

- NZ Herald

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