13% of homes sell at a loss: Q2 Pain & Gain

Nick Goodall (00:07):
Kia ora and welcome to the New Zealand Property Market Podcast, brought to you by Cotality for the 17th of August 2026. I'm Head of Research Nick Goodall, and today I'm joined, as per usual, by our Chief Economist Kelvin Davidson. Kelvin, we have got rugby coming at our eyeballs at the moment. But before we get into all of that, because there's plenty to touch on from that perspective, you put out the latest Pain & Gain report last week. We did mention it last week, of course, but I think today we've got a chance to get into some of the detail within the report. So I suppose it's all yours, mate. What were the key highlights for you in the release of the Pain & Gain report for Q2?

Kelvin Davidson (00:43):
Yeah, so I mean, a bit more pain, but less gain. That's been a story for a while in this soft property market; you'd anticipate that property sellers aren't doing quite as well and it's a buyer's market. So yeah, that is kind of the theme that's still coming through. What we look at here is simply all the properties that were resold in the second quarter of the year, and then look at the price they got versus the price the owner originally paid. So it's a gap between sale price to sale price. Pretty basic measure, but I think people really like it. They find the title catchy and also it's real money, it's real transactions, it's how much people are actually losing, at least in gross terms, or making. So it always gets a decent amount of coverage.

About 13% of properties were sold for a loss in the second quarter. That's been part of a downwards trend for a while. At the peak of the market, that number was pretty much zero. So in the last four or five years, it's gone from pretty much nothing selling for a loss up to about 13% now. Definitely a gradual sort of slowdown. It hasn't been a slump. We saw after the GFC that that proportion of properties being sold for a loss went from about zero at the peak of the market to about 20% being sold for a loss in around two years, so it was quite a sharp adjustment. This has gone from zero to 13% in four or five years. So it's been more of a drift rather than that sharp adjustment we saw after the GFC.

I think it could be any number of factors, but a couple of things that jump out to me is perhaps higher credit controls over time. I'm sure banks were not reckless back in the GFC either, but I would suspect that serviceability testing has got more stringent over time. We've got things like the LVRs, DTIs now. So it's just that general environment of credit checks being a bit higher standard which has probably weeded out some of those potentially risky loans or risky house purchases before they even got going. That might have limited some of the pain in this cycle. And also employment. We're not seeing a lot of jobs growth at the moment and yes, there has been unemployment, but it's been more about a bigger labour supply rather than job losses. Whereas after the GFC we did see genuine job losses. So I think those two things have probably insulated the market to some degree in this cycle. But yeah, still seeing more pain.

On the flip side though, of course, 13% being sold for a loss means 87% are still being sold for a gain of some level. It hasn't been a slump and still a lot of people do make gross profits. The median gain across all of those transactions where a profit was made was $280,000. So again, still pretty significant. It's down from $440,000, which was the number at the peak. So it has shifted a lot, but for those people who are making a gain, it's still pretty significant.

A big factor there is hold period. For those people that did make a gain in the second quarter, median hold period was 10.4 years, that's a record high. Versus 4.3 for losses. So pretty clear again that if you buy and hold, and if you can do that for a decade or so, you're probably more than likely to make a gain. Whereas if you've had to buy and sell in a short period of time, it's much more likely to make a loss, particularly in this cycle. Because if you think about 4.3 years, you go back, that takes you pretty much to the peak of the market. If you've had to buy at the peak and then resell again within that last four or five years, that's been a tricky market to do that.

Those are probably the key things really. That hold period stretching out for gains could be choice, people waiting for the recovery, potentially just a little bit cautious. We've seen with our movers data from buyer classification that people are just not moving around as much as they might ordinarily do. It could be a choice factor, people wanting to ride this out. Maybe necessity though, it could be that deals are just taking longer, people can't get the price they want so things are a bit frozen up. There are not huge gaps between investors versus owner-occupiers, that's all fairly consistent.

Regionally, no surprises, Auckland and Wellington are weaker in terms of resale performance versus somewhere like Christchurch. There are still loss-making sales even in a market like Christchurch, so it's not like everywhere is totally immune, but those regional differences fit with what we know from property values. We're seeing apartments being sold for a loss a lot more often than say standalone houses, but there are no real signs that apartments are collapsing. Yes, they're a little bit weaker, but the hold periods for those losses aren't dramatically different, so it's not as if people are really abandoning these properties. That apartment segment is just a little bit weaker in terms of values, it doesn't get as much capital growth over time anyway. So there's always going to be more chance of making a loss if you haven't built up as much capital gain.

Where do we go next? Well, think about lots of listings, economic uncertainty, things still being in buyers' favour. It's difficult to see this turning around very much in the next little while. It's probably going to remain a testing period for sellers.

Nick Goodall (07:05):
I'll leave a link to the report anyway. It's worth going and looking at because it does cover essentially every TA, every city, town in the country. The context there is so interesting. Go back to the fact that we've got a lower percentage loss now than we did at the peak of the global financial crisis, despite a longer period of downturn and flat. It tells you so much about the trajectory of this downturn compared to that one. You look at it and go, 13% sounds really bad, or look at apartments at 45%. That does tell you something, but the context is really important and relating it back to the home value index, market activity, and the unemployment data.

The number that always stands out is the number of years held if you sold at a loss. It almost always goes back to the peak of the market. If you did buy at that peak and for whatever reason you're going back to market now, unfortunately, you are going to take a loss on that sale almost every single time. This is just a reflection of those people that bought then that are now in a position where, for one reason or another—life stage change, moving overseas—they have to sell.

Some of the stats that I pulled out that I think are worth touching on: you talked about the hold period for those that made a gain, 10.4 years. For Wellington, it's 13.1 years. It's a long time that people are holding on, likely because they're going, "if I need to make that next purchase, I'm staying a little bit longer when the uncertainty is greater."

The other one that I thought was interesting is that Auckland has a greater share of losses at 20.9%, whereas Wellington is 18.4%. Now in most other measures, like the home value index, Wellington is further down from peak, so typically you'd expect Wellington to be higher. But it is the makeup of the property types in Auckland being more towards apartments and flats. For Auckland flats are up around 30% [loss ratio], whereas houses are a little bit lower, around 15%. People value land. Standalone houses have land, which has generally appreciated over time. Apartments definitely attract greater yield most often because the value of the property is lower, but the yield is more attractive to investors.

You touched on Christchurch still having 5.3% of sales at a loss. What was close to zero was Invercargill. We know that's the market that's at a new peak now, 8% annual growth in values, but still 1.2% of properties sold at a loss—the lowest in the country. The other two that were under 2% were Gore and Timaru. So South Island generally supporting agricultural industry. On the other side, those that have high percentages of losses around the 20% mark were the Waikato district, specifically Ngāruawāhia and Huntly, and South Wairarapa.

What are we going to see in the future? I can't see it changing too much. We're not expecting value growth to come back soon or quickly. It's going to depend on when you bought that property. If you've had it for ten years, you should be fine. If you've had it for five, maybe not so much. I expect these trends to continue.

That'll pretty much do us for rounding out the Pain & Gain report. I don't know if that sparked any further thoughts. Otherwise, the big macroeconomic data I wanted to touch on is the annual net migration data.

Kelvin Davidson (15:28):
Yeah, I might as well just move on to the migration figures. There are so many moving parts, so I try and keep it relatively high level. In the last 12 months, we've had 17,500 net new migrants into the country. That's a 17-month high, up from a trough of around 9,000 or 10,000 six or eight months ago. But 17,500 is still a lot lower than an average. The average is about 30,000 to 31,000. So we're still 12,000 or 13,000 people below where we'd normally be. It helps explain why property rents are still pretty subdued. We just don't have that same population growth that we used to have, and at the same time we built more houses.

There's this perception that for a while we were losing people; actually no. In net terms, that balance never actually went negative. The thing is, what people think about when they say we're losing people is just the New Zealand citizens side of things. In the last 12 months, the net balance of New Zealand citizens coming in minus those leaving is negative 37,500. There are more New Zealand citizens leaving, heading off to Australia or the UK. On the flip side, we've had 55,000 net new migrants coming in. That's how you get your overall 17,500 net gain. Yes, New Zealanders are leaving, but it is being outweighed by new migrants coming in.

I think it is showing up in subdued rental pressures and it has wider economic implications too. We don't have the same consumer spending boost that you might ordinarily get. But at the same time, there is a bit less pressure on infrastructure and the health system.

Nick Goodall (19:25):
I think the question then is, shouldn't positive migration still mean net positive demand for rental property? You would expect there to be upward pressure on prices. But it's relatively expensive to rent, and not all rental demand comes from net migration—it also comes from household creation. That's kids leaving the parents' place, or people leaving large flatting situations to live on their own. It's very likely that household creation numbers are quite low at the moment because it's simply so expensive. You're more likely to stay at home longer or stay in larger flatting situations where the costs are shared. So even though we've got a net increase in people coming to the country, household creation is relatively low, which is holding rental growth down.

It is a failure of our economy to provide strong opportunities for those New Zealand citizens to stay here. We want that net balance of New Zealanders leaving to come down so they have opportunity here in New Zealand.

That'll pretty much do us for rounding up last week's data. The monthly video is live already on the Cotality NZ YouTube channel. This week, the Affordability Report is out—our six-monthly report of affordability measured in four different ways. Anything you want to tease on that one before we round out the property chat and talk some rugby?

Kelvin Davidson (23:41):
It goes public on Wednesday. There's some really interesting stats in there. Let's just say there's been a big improvement in housing affordability. It's never easy, but the adjustment in the past four or five years has really made a big difference, especially with interest rates having come down and incomes having gone up.

Nick Goodall (24:19):
Yeah, we measure it on the value-to-income ratio, the proportion of income required to service a mortgage, proportion of income required to service rent, and how long it takes to save a deposit. Keep an eye on that one mid-to-late this week, and we will chat about it next week.

Mate, rugby chat. You obviously attended the Ranfurly Shield over the weekend, the Taniwha smashed Taranaki. We [Northland] have got a challenge for the Shield this Thursday. I wish I could be there, but unfortunately parenting alone this week. And then of course we've got the All Blacks and this greatest rivalry tour heating up now. How was the rugby on the weekend?

Kelvin Davidson (25:44):
I was down at the stadium on Saturday with some of the family. I didn't actually see a lot of the game; we were up and down the stairs to the kids' zone and the food stalls, but it was still fun. I'd love it if the Ranfurly Shield could get down to the Heartland teams—Mid Canterbury, South Canterbury—or Northland on Thursday. Get it spread around.

With the All Blacks, there's that old thing of do I get up and watch the Test match live? It's Ellis Park, it's going to be massive. I don't know if I'll cave and set the alarm on Saturday night, but I'm feeling that excitement build.

Nick Goodall (27:39):
It's heating up in the NRL too. The Warriors were too good on Saturday. So for the NPC, it's Ashburton/Mid Canterbury for you?

Kelvin Davidson (27:50):
Yeah, the Mid Canterbury Hammers. I just think any of those smaller unions getting the Shield would be cool.

Nick Goodall (28:19):
I just wanted to clarify that you grew up in Mid Canterbury, hence you're not too worried about Canterbury, the big dog, holding onto it. The NPC is just so good right now. I'm certainly glad to see the Taniwha pretty strong this year. Let's take that Shield—something I've never seen us win in my lifetime, and I'm 43 years old.

Moving on to the All Blacks. I have got up for the last two 5:00 a.m. games, but 3:00 a.m. is a different proposition. I can't wait to see this. South Africa are the best team in the world still, and the TAB opened with odds of the All Blacks at $2.80, which is pretty long odds. But as long as they get the big boys back, I think we've got the team. It's one of four tests as well, so it's going to be interesting to see how both teams evolve. I'm still in awe of Ma'a Nonu from last week doing that single-man Haka. That gave me proper chills.

Kelvin Davidson (31:37):
I'm 50/50 at the moment, but I suspect the alarm will be set. How good is Ellis Park? The All Blacks have been reasonably successful there in the past. It could be the clash of two styles again. Bring it on.

Nick Goodall (32:11):
Just fingers crossed it's not decided by a referee who wants to get too involved or a TMO who gets overly involved. We are not a rugby pod, but I couldn't hide my excitement for it. We will no doubt chat about that next Monday as well.

That'll do us for today. Thanks as per usual for your thoughts, Kelvin, particularly providing context on the Pain & Gain. Thank you very much for listening. Please do get in touch with any questions or feedback. My name is Nick, he's Kelvin. You've been listening to the New Zealand Property Market Podcast. Mā te wā.

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