Owners now hold properties a record 10.4 years before selling for a gain
The share of New Zealand homes selling for a profit has fallen to its lowest level in almost 14 years, as the country's prolonged property downturn continues to erode resale outcomes for owners looking to sell.
Profit share falls, hold periods stretch to a record
Cotality NZ's Pain and Gain Report for the June quarter found 86.9% of residential properties resold for more than their original purchase price, down from 88.1% in the March quarter and the lowest proportion since the final quarter of 2012. The share of loss-making resales rose to 13.1%, continuing a steady slide from the market peak, when more than 99% of resales turned a profit.
Cotality NZ chief property economist Kelvin Davidson (pictured) said the deterioration reflects a drawn-out adjustment rather than a sudden shock, with national values sitting around 18% below their 2022 peak.
"Property values peaked in early 2022 and have been through more than four years of falls and stagnation since," Davidson said.
He noted the current cycle looks markedly different from the global financial crisis, when "the proportion of profitable resales fell from around 98% in mid-2007 to about 80% within two years," compared with a much more gradual adjustment this time.
Davidson attributed the difference partly to "stronger serviceability testing within the banks" and a labour market softening driven more by rising labour supply than mass job losses.
Stats NZ data backs this up: unemployment hit an 11-year high of 5.6% in the June quarter, but employment held steady at 66.7% as more people entered the workforce rather than lost jobs.
Owners who sold for a gain in the June quarter had held their properties for a median of 10.4 years, a fresh record for a series dating back to the mid-1990s and up from 10 years in the previous quarter.
By contrast, the median loss-making seller had owned their property for just 4.3 years, pointing to a wave of owners who bought near the 2022 peak — when mortgage rates were rising — and are now selling into a softer market.
Apartments and Auckland bear the brunt
Apartments recorded the sharpest deterioration, with 45.2% reselling at a loss in the June quarter, up from 39.4% in the March quarter and the highest proportion since the third quarter of 2010, roughly 16 years ago.
Standalone houses fared far better, with just 12.2% selling at a loss. Auckland and Wellington posted the weakest results among the main centres, with 20.9% and 18.4% of resales respectively making a loss, and median losses in both cities reaching $85,000, well above the $60,000 national figure.
Despite the softer conditions, Davidson said the broader picture remains one of resilience rather than distress.
"Even with the gain rate at its lowest since 2012, more than eight in every 10 resellers are still selling above their original purchase price," he said, adding that with listings elevated and buyer choice plentiful, "it's difficult to see resale performance improving significantly in the near term."
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