Almost half of apartments resold below purchase price in September quarter
The share of New Zealand homes resold at a loss has reached its highest level in 14 years. Apartments and recent buyers are the hardest hit, but most sellers are still walking away with a profit.
Cotality NZ’s Pain and Gain Report for the September quarter found 15.8% of residential properties sold below their previous purchase price. That’s the highest share since Q3 2012. The remaining 84.2% sold for a gross profit.
Most sellers are still well ahead. The national median gain was $270,000, and gross gains across all Q3 resales totalled $3.6 billion, compared with $179 million in losses.
According to Cotality NZ chief property economist Kelvin Davidson (pictured), the share of profitable resales has taken four to five years to slip from about 99% at the peak, a far slower decline than during the global financial crisis.
“Overall, the latest figures are not a sign of a fresh collapse,” he said.
Short hold periods leave buyers exposed
How long owners had held a property made a clear difference. Homes resold at a loss had been owned for a median of 4.5 years, compared with 10.4 years for those sold at a gain.
Davidson said recent buyers had been more exposed to the downturn, and that many may have had to sell sooner than planned.
“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,” he said.
Property type also mattered. Almost half (48%) of apartments resold at a loss, compared with 22.5% of townhouses and 13.4% of standalone houses. However, the typical loss on apartments, about $60,000, was the same as for houses.
Auckland and Wellington lag
Auckland and Wellington recorded the weakest results among the main centres. One in four Auckland resales (25.5%) made a loss, followed by Wellington at 20.4%, Hamilton at 19.1% and Tauranga at 15.3%. Christchurch (7.5%) and Dunedin (6.9%) fared much better.
Losses were also larger in the two weakest markets. The median loss was $89,000 in Auckland and $78,000 in Wellington, against $60,000 nationally.
“Population falls and economic uncertainty have weighed on Wellington, while Auckland has seen a steady rise in housing supply,” Davidson said.
Values still slipping
The latest REINZ figures point the same way. Auckland’s median price fell 7.6% year-on-year in October and Wellington’s 4.5%, while Christchurch City set a record median of $740,000.
Nationally, values are still falling, with Cotality’s Home Value Index recording a seventh consecutive monthly fall in October.
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