The foreclosure ghettoes are not always in the 'mortgage belt', but the homes there won't sell at even a fraction of their original cost.

Sale signs have gone up across the country, as the financial pain hangs high for all to see. While the banks enjoyed record billion dollar profits last year, they sent the sheriff knocking on the doors of plenty of families who failed to meet their repayments.

And they didn’t discriminate between the very rich and poor. Repossession was up 22 per cent last year, and it seems we're not out of the woods yet.

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• Mortgage broker's saving tips
• Dirty rotten bankers?

In NSW 2466 writs of possession were issued. The worst-hit area is the Central Coast - an hour north of Sydney. In Victoria, 1790 families failed to pay the mortgage. 1242 families faced eviction in Western Australia, 45 faced the same in Tasmania, and more than 1800 in Queensland.

Adelaide grandmother Glenda Ellis used the equity in her home to buy a family fish and chip business, but now she's lost both, when the bank came knocking.

“I am never going to have another home to leave my children,” Ellis said.

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Last year saw the big end of a town hit hard too. Sovereign Island is one of the most exclusive addresses in the country, where the filthy rich used to clean up.

Here mega mansions are the norm, and eighteen months ago the median house price was $2.2 million. Now though it's referred to as a ‘mansion graveyard’.

Homes half-built are now on hold as the rich have abandoned them. Some are at slab stage, others weeks off completion, and all are now wasting away on prime pieces of land. There are as many as fifteen such properties in the area, including the biggest of them all - meant to be a $40 million monster, and now arguably Australia's most expensive squat.

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But even more worrying is the number of homes for sale at a time when selling is a last resort. There are as many as 140 of them.

Nationwide waterfront living is the cheapest it's been in decades, and there are huge discounts to be had. But buyer’s agent Tony Coughran says it won’t stay this way forever.

“I think now is an opportune time, especially if you go to auction and buy it. At auction conditions you can absolutely clean up,” Coughran said.

And that’s not just at Sovereign Island. Coughran’s other picks, where prices have crashed, include Hedges Avenue at Mermaid Beach; Paradise Waters on the Gold Coast; Mosman on Sydney's north shore; and Toorak in East Melbourne.

“People are saving up to 40 per cent literally on beautiful prime Australian real estate,” he said.

Managing Director of SQM Research Louis Christopher says there's a reason the RBA has been forced to cut rates, and it's not a good sign if more rate cuts follow.

“2011 was a bad year for many people who owned a home - no doubt about it. Many first home buyers who basically took out that First Homeowners’ Boost in 2009 got burnt in 2011. And that was as a result of the rising interest rates that we had in 2010,” Christopher said.

According to him “it's the Federal Governments fault - Rudd's battlers. You've got to remember that the Rudd’s Government introduced the First Homeowner's Boost in 2009. And it was all designed to actually save the housing market. Well they saved the housing market for a time, but at a major expense for their voters. Right now, many of them are facing bankruptcy.”

In order to help families struggling with debt, the Bankers Association has set up a website called Doing It Tough, with tips on how to safeguard yourself from foreclosure. Their biggest tip of all – don’t hide your troubles from the bank.

“It is important to do everything to meet your payments, and if you cannot meet your repayments, speak to the bank. Communication is absolutely everything in this scenario, so if you are experiencing difficulty, call your bank or call your financial planner - someone who can help you perhaps get you out of trouble, and manage all your affairs better,” Christopher said

As a result of the downturn, property prices in many parts of the country are the cheapest they've been in years.

• Macleay Island in Queensland has seen property prices slashed by 42 per cent.
• Ellen Grove, also in Queensland, is slashed by 37 per cent.
• In New South Wales the suburb of Magenta has seen a slide of up to 38 per cent.
• A 34 per cent drop can be found in Croydon Park in Melbourne.
• The same heavily discounted properties can be seen in South Australia.

So what does this year means for the one in ten home owners struggling from mortgage stress?

According to SQM Research, that all depends on what happens in other parts of the world.

“The risk is that if we see European Banks freeze up or become bankrupt, it means that our local banks here will not be able to borrow overseas anymore. And that means they won't have any more funding really, or any major amounts of funding. And so they themselves will have to radically freeze up credit in Australia, which means fewer loans for the housing market, and it means definitely recalling in bad or doubtful loans,” Christopher concluded.

• Doing it Tought - www.doingittough.info
• SQM Research - www.sqmresearch.com.au