.svg)
Property resale losses in Q3 reached their highest level in 14 years, with 15.8% of properties resold for less than their previous purchase price.
Almost half (48%) of apartments resold at a loss, compared with 22.5% of townhouses and 13.4% of standalone houses.
More than four in five resellers still made a gain, with the national median gain remaining sizeable at $270,000.
The proportion of New Zealand properties resold at a loss reached its highest level in 14 years in the September quarter, with 15.8% changing hands for less than their previous purchase price.
Cotality NZ’s Pain and Gain Report shows 84.2% of residential properties were resold for a gross profit in Q3, while the share making a loss was the highest since Q3 2012.
Time in the market remained a key factor. Properties resold at a loss had been owned for a median of 4.5 years, compared with 10.4 years for those resold for a gain.
Almost half (48%) of apartments resold in Q3 changed hands for less than their previous purchase price, compared with 22.5% of townhouses and 13.4% of standalone houses, though this should be viewed in the context of apartments representing a relatively small share of the market.
Cotality NZ Chief Property Economist Kelvin Davidson said owners who bought more recently had generally been more exposed to the market downturn.
“Most buyers would not have purchased with the intention of selling again so soon, but circumstances might have worked against them, such as a family or job change, or financial strain brought on by previously sharp rises in mortgage rates.”
Despite weaker resale conditions, the national median gain remained sizeable at $270,000 in Q3, while the median loss was $60,000.
Almost half of apartment resales make a loss
Apartments continued to record the weakest resale outcomes, although their steady median hold periods suggest owners have not been abandoning the segment.
“The apartment market has faced a sustained soft patch during the past four to five years, but the typical loss is not materially different from other property types. The median loss on apartments was around $60,000, the same as houses,” Kelvin Davidson said.
“It’s also worth noting that the percentage of apartment resales that were made at a loss was inflated to an extent simply by the drop in the overall number of transactions.”
“It’s also just a sign of the times. Apartments tend to deliver less price growth than other property types over time, so are always a little more vulnerable to losses.”
One in four Auckland resales make a loss
Auckland and Wellington recorded the weakest resale performance among the main centres. In Auckland, 25.5% of properties were resold for a loss in Q3, followed by Wellington at 20.4%, Hamilton at 19.1%, Tauranga at 15.3%, Christchurch at 7.5% and Dunedin at 6.9%.
Median losses were also highest in Auckland and Wellington at $89,000 and $78,000 respectively, compared with $60,000 nationally. However, median gains remained substantial at $341,000 in Auckland and $326,000 in Wellington.
“Population falls and economic uncertainty have weighed on Wellington, while Auckland has seen a steady rise in housing supply. The relative weakness of apartments has also affected both markets,” Kelvin Davidson said.
More than four in five resellers still make a gain
Across all Q3 resales, gross gains totalled $3.6 billion, compared with $179 million in gross losses.
Kelvin Davidson said the deterioration in resale conditions remained gradual, with more than four in five property resellers still making a gross profit.
“The share of profitable resales has taken four to five years to ease from around 99% at the peak to 84.2% now. During the GFC, it fell much faster, from about 98% in mid-2007 to around 80% by early 2009.”
“Overall, the latest figures are not a sign of a fresh collapse. Instead, they reflect the large falls in property values already seen, with more sellers progressively just having to make a deal in softer market conditions as each quarter passes.”
