With the housing market in general around Queenstown reflecting a 15% downturn in prices, mortgagee sales are considered by buyers to offer the best value, however, those sales also collectively represent a loss of value amounting to millions of dollars for the area.
Statistics on mortgagee sales, which must be publicly advertised as such when they are listed, are not collated by either the Real Estate Institute of New Zealand (REINZ) or Quotable Value, with one industry source saying banks did not disclose mortgagee sale data.
It appears at any given time there may be eight to 12 forced mortgagee Queenstown sales advertised locally or on the Internet, with one estimate putting Wakatipu mortgagee sales for 2008 at up to 60 properties.
One specialist mortgagee auction website has dozens of properties for sale spread across the country, with almost a dozen specific to the Wakatipu area.
They include three apartments in the Lake Esplanade Villas for sale at almost $1.3 million each, a 40-unit consented section and two Pounamu complex apartments for sale at $440,000 and another from $385,000.
Local property publications this week had more than half a dozen mortgagee auctions or tenders advertised, mainly around the Wakatipu area.
Several of the larger real estate companies around Queenstown were contacted for comment, but most did not want to be interviewed because of the lack of immediate data they held on mortgagee sales.
However, Central Otago Lakes District spokesman for the REINZ, Adrian Snow, said the forced mortgagee sales were either banks or, more often, finance companies foreclosing on clients who were in arrears and had defaulted on payments.
He said the banks preferred the tender and auction process because it was considered the best way to determine open market value, and noted there was a public "presumption" that mortgagee sales offered them the "best deal".
"As the economy tightens more homeowners will come under pressure. It's possible we'll see an increase of more residential properties coming up at mortgagee sales . . . and more managed apartment sales," he said.
Stephen Hebbend, of Southern Lakes real estate, said the company had about 12 properties being sold under mortgagee sale or "stressed sale" conditions at present.
He believed the over-riding reason prompting mortgagee sales was people overextended themselves on the amount of mortgage or mortgages they held, compared to their ability to service the loan, especially when their personal situations, such as employment, changed, he said.
The present low value of the New Zealand dollar was a "very significant component" to consider when purchasing in Queenstown, he said.
"There is a large percentage of sales made to overseas purchasers which is continually growing," Mr Hebbend said.
Increasing growth was coming from Australia, but there was also increasing European and Asian interest because of the concerns of safety and overpopulation.
"There is a general desire to focus more on quality of life rather than being the richest person in the graveyard," Mr Hebbend said.
Mr Snow said mortgagee sales, while not identified separately in monthly REINZ statistics, did contribute to overall sales and median prices and had a negative effect.
He was reluctant to speculate on how far below capital values the "average" mortgagee sale was, saying only that compared to 2007-08 all prices were, "rule-of-thumb", down 15%.
He said a large number of the overall managed apartments would have been sold to overseas investors and in places such as Britain and the United States their respective finance sector woes had been most pronounced.
During the past three months both England and the US had announced trillion-dollar bail-out funds for their finance sectors.
However, investors had remained jittery and equity markets had this week begun another round of global volatility.
"There would be a number of [overseas] buyers who purchased on the prospect of having an income stream [from the managed apartments], which were not achieved.
"Some would have handled this by simply defaulting on their loans", prompting the bank or finance company towards forcing a mortgagee sale to recoup.
Mr Snow reiterated there was no central statistical base for collating mortgagee sales, but nevertheless estimated at any one time during 2008 there were four to six properties for sale locally and during 2008 there may have been 50-60 mortgagee sales.
Mr Hebbend said the benefits of handling a "stressed sale", prior to a forced mortgagee sale, was that purchasers were assured chattels were included.
