REPOSSESSED homes are flooding the market with properties being offered at heavy discounts - some selling for just a quarter of their previous sale prices.
Two separate studies have shown a dramatic increase in properties being put on the market by receivers in recent months. Both property investors and developers are being squeezed in the uncertain economic climate.
Almost a third of all major investment properties advertised in October and November last year came from forced sales, according to research from property valuers LandMark White.
Another study has shown receiver-initiated listings have risen by 50 per cent in some parts of Australia in the past year with homeowners forced out by crippling mortgage repayments, personal debt and the rising cost of living.
LandMark White research analyst Ross Horsley said the trend was expected to continue in 2012.
"Those months are fairly quiet in terms of big transactions so you would expect to see more forced sales this year, they are already up in January," Mr Horsley said.
LandMark White's Forced Sales Index analysed major investment advertisements – including commercial - for the two-month period and found 31.3 per cent of properties belonged to a mortgagee, receiver or administrator.
More than half were in Queensland - predominantly residential properties in regional areas. New South Wales had the second highest number of forced sales at 26.1 per cent – mostly industrial and commercial real estate.
While most receiver-initiated residential properties are taken to auction at reduced prices, mortgagees usually only heavily discount homes that have been overvalued, Mr Horsley said.
"The mortgagee has a legal obligation to secure a fair market price and they won't sell it for less than the market value so if it comes in under the reserve there won't be a sale," he said.
