You’ll be aware that all numbers for corporate insolvency have been heading down since the peak of 2013. In a further good sign for corporate Australia, calendar year 2014 saw a drop in the number of mortgagee property sales. Landmark White (LMW) tracks an interesting statistic, being advertisements run by mortgagees and receivers in metropolitan newspapers for the sale of commercial property.
LMW managing director Robert Wilson said there is a distinct downward trend in the number of ads for distressed properties in all kinds of media. There were 52 distressed properties advertised in the December quarter of 2014 which was the highest number of distressed properties for sale in the year. Distressed commercial property sales make up about 12 per cent of total national listings. The highest category was industrial properties, followed by residential and leisure.
The fourth quarter in 2013 saw 60 distressed sale advertisements representing 17 per cent of total sales.
The state by state breakup is interesting:
- Queensland lead the way in forced sales, with 60 per cent of the national total for the December quarter and 52 per cent of the year-to-date total.
- NSW receiver sales listings was down as a proportion of the total, falling to 17 per cent in the December quarter 2014 from 27 per cent in the previous quarter. That was a share for NSW of only 24 per cent of all distressed asset listings.
- Victoria’s share of receiver sales listings rose to 15 per cent in the December quarter 2014 from 5 per cent in the previous quarter.
LMW also issue a warning. They note that the chase for higher yielding bricks and mortar assets and improved economic conditions has seen fewer mortgagee property sales being made in the non-mining related states. But they warn that the lower interest rates could also see a spike in mortgagee sales in coming years when interest rates reset possibly resulting in borrowers being over extended. That was the case in 2008 when rates started to rise and the inflated property values at the time of purchase, could not be attained, leading to the appointment of receivers.