A property developer warns more investors will hit the wall as they face "unprecedented challenges" from skyrocketing costs in New Zealand, and a rise in mortgagee sales is likely.
Data from Corelogic shows the number of properties being sold as mortgagee sales has dropped significantly. In the July 2009 quarter, there were 777 mortgagee sales - and just six in the January quarter of 2021.
But there are concerns those mortgagee sales are set to spike as higher interest rates put pressure on household budgets.
Auckland Property Investors' Association former president David Whitburn said developers weren't immune to the cost of living crisis and expected mortgagee sales to rise.
"The writing is starting to come on the wall now, we have more pressures," he told AM on Wednesday.
"[Developers] are facing unprecedented challenges in procuring construction labour with tight immigration settings, construction materials and making sure we can get resource consent quickly and building consent quickly enough.
"As the quarters and months roll on, I do think we are going to see, unfortunately, more developers hit the wall."
Whitburn said some new developers hadn't experienced anything other than a booming property market.
"When the chips are down and when the tide is out they could get caught a bit short," he said. "It is something to watch as these interest rates bite."
But Whitburn said buyers shouldn't be concerned about a developer's inability to deliver when purchasing from a good developer with a proven track record.
He urged buyers to be cautious about the developers they purchase from.
"There is no substitute for a proven track record; experience, getting runs on the board, often a simple search of Google search you can find a bit out about a developer and what's out there."
