Sorry to start another property thread, but...
I know Wayne will enjoy this, he's a housing bear from way back, so am I.
Perth, Adelaide and Tassie residents - a mortgagee sale is coming to you in a few years, prepare now!!
Forced sales hit property market By Anthony Klan
August 28, 2006 12:00am
HOMEOWNERS coaxed into reinvesting the equity in their homes are facing bankruptcy as falling property values and rising interest rates stretch them beyond breaking point.
These duped mortgage-holders, many of them baby boomers preparing for retirement, are among an increasing number of people facing eviction across the country.
The number of eviction notices served in New South Wales surged more than 50 per cent in the year to June, with the fallout most pronounced in Sydney, where some agents have as many as 18 mortgagee sales listed on their books.
According to the NSW Attorney-General, there were 5316 eviction orders lodged last financial year, up a massive 52per cent on the 3495 the year before. Although many of those struggling owners bought at the peak of Sydney's property boom in 2003, agents are reporting distressed owners who have used surging property values to borrow against their homes.
Patricia Maynard, 65, and husband Richard, 75, face losing their $1.2 million Coogee home in Sydney's east after they were talked into withdrawing $960,000 from the property they originally paid off in 1986.
Ms Maynard said the couple were approached by a group in late 2002 who offered to help them unlock the equity in their home to reinvest and fund their retirement.
"In February 2003, we went and got the bank cheques and we thought, 'Great, we don't need Centrelink payments any more, we can be self-funded retirees'," she said.
"We were so naive, we'd paid off our house in 1986 and we were just retirees on a pension."
The company has been placed into liquidation, the couple now owe $1.1 million on their house and Ms Maynard has been forced to return to work.
"I thought there was no way something like this could happen in 2006 in Australia, that these people could get away with something like this," she said.
Ethical real estate campaigner Neil Jenman said the number of people who had lost the equity in their homes and were seeking help had "at least doubled" in the past six months and the problem was expected to worsen.
He said most of the people losing money were driven by a fear of being poor in retirement rather than greed.
"It's not greed, it's fear driving people into these things," Mr Jenman said. "They are in their 50s and they say to themselves, 'I haven't got my finances in order so I'd better fast-track it'.
"It should be against the law for unsophisticated investors -- that is, anyone with a net worth of under $5 million -- to mortgage their home and go into any scheme without first receiving independent legal advice." Although there are reports of increasing mortgagee sales across Sydney, outer-western suburbs such as Liverpool, Kellyville and Ingleburn have been hardest hit by the downturn.
Many owners in these suburbs who have borrowed against their homes now have mortgages bigger then the value of their properties -- and the banks are moving in.
Real estate agent Essam Eskaros, of PRDnationwide in Liverpool, said that of the 19 properties the group had listed for sale this month, 18 were mortgagee sales.
Ian Carroll, of agents Century 21 Carroll Combined in Blacktown, said about one in five properties were forced sales instigated by banks.
"We've had one unit that we sold in 2003 for $319,000 that just resold for $240,000," Mr Carroll said.
"We've also had a development site that was bought for $670,000 and which just resold for $365,000."
Auction clearance rates remain low in the eastern capitals, with less than half those properties auctioned in Sydney being sold.
Over the weekend, the auction clearance rate was 49.8 per cent for Sydney and 56 per cent for Melbourne, according to Australian Property Monitors.
Despite the weakness in the market, high house prices continue to lock families out of home ownership -- a problem the Howard Government blames on the states.
"The stubborn refusal of state and territory governments to release enough land for new homes is forcing the price of house and land packages beyond the means of many hardworking Australians," John Howard said yesterday.