Source: Radio New Zealand
Almost 20 percent of Auckland homeowners are selling their properties for a loss. RNZ / Kate Newton
Almost 20 percent of Auckland homeowners are selling their properties for a loss.
Cotality has released its latest Pain and Gain report, which shows the number of properties being sold for a gain or loss around the country.
It reveals that in the third quarter of this year, 87.8 percent of properties nationwide were sold for more than the sellers had previously paid for them.
That is down from 89.4 percent the previous quarter and is the largest percentage making a loss since 2013.
In Auckland, 18.2 percent of owner-occupier sellers are making a loss, and 22.8 percent of investors.
It is the highest percentage of losses among the main centres. In other areas, South Wairarapa had 32 percent making a loss in the quarter and Masterton 18.8 percent.
The data does not include the costs of sale, including real estate commission, so the number making losses is likely to be higher.
In Wellington, 13.4 percent of owner-occupiers and 20.9 percent of investors made a loss.
Cotality chief property economist Kelvin Davidson said the data was consistent with prices still being well off their peaks in many areas, and buyers having most of the pricing power.
“Both Auckland and Wellington went through very strong growth during the boom period, so more recent buyers paid top prices and are now more vulnerable. Auckland’s larger pool of apartments also contributes to its higher loss rate, although that reflects long-run performance rather than short-term weakness,” he said.
The national median resale gain in the third quarter was $270,000, down from the late-2021 peak of $440,000 but still higher than anything recorded before late 2020. The median loss was $50,000, slightly below that of the second quarter.
Davidson said the difference was how long people had held a property before they sold it.
The median length of time sellers had owned a property that sold for a gain was 9.5 years, compared to just under four years for those making a loss.
“The resale performance of property is not weak in an absolute sense, but the figures highlight the role of time in the market. Longer ownership provides a much greater likelihood of securing a capital gain.
“Three-and-a-bit years ago places you [were] at a point in the cycle when prices were extremely high and mortgage rates were already rising. Anyone who bought then and has since faced a change in circumstances is more exposed to selling at a lower price than expected.”
Cotality chief property economist Kelvin Davidson. SUPPLIED
Standalone houses were less likely to sell at a loss than apartments.
They had a loss rate of 11.4 percent compared to 36.2 percent of apartments.
Queenstown Lakes was a standout in the data, with only 2.4 percent of sellers making a loss and a median gain of $486,000.
Davidson said while the data was weaker, it was not really weak. “If you look at the median gain of $270,000 most people would say that’s still pretty substantial. It is weaker than it’s been for quite some time but it’s not a complete blowout either. If you go back to the GFC around 2007, 2008, the share of resales made for a profit fell from pretty much 100 percent to close to 80 percent in about two years. This time it’s fallen from about 100 percent to about 90 percent in about four years. It’s been more of a slow burn.”
He said more people have been able to stretch out their mortgages to save cash. “It’s always going to be a bit lagged because if you think things have turned around …hold period is a big factor. Even if values have turned around in the past couple of months they are still 17 percent below where they were at the peak. Anybody who bought four years ago even if they have seen their property value tick up in the last few months there is still a likelihood of making a loss because they purchased at the peak of the market.”
He said anyone who bought at the peak might be in a difficult position for a few more years yet. “If you think we might get 4 percent or 5 percent growth maybe per year in the next three or four year the cycle itself could well be seven or eight years long. If you bought in 2021, perhaps the early months of 2022, that in hindsight was a difficult period to have made a purchase if circumstances changed and you’ve had to sell again in a short period of time.”
First-home buyers might particularly feel the impact if they had not been through property cycles before. “It’s all very well for people to say ‘oh well don’t’ worry about it you’ll ride the cycle out and house prices will rise’ but it’s very different if you’re in those shoes and you paid a price that was top dollar in 2021 and you’re still sitting on a paper loss four years later.”
The share of loss-making resales is expected to remain elevated in the near term, given the subdued market backdrop with outcomes to hinge on values, household sentiment and the volume of stock for sale.
“Vendors may need to meet the market, but gains will remain substantial for those who have held for a long period. Most owner-occupiers won’t see a cash windfall, as equity generally rolls straight into the next purchase unless they’re downsizing or moving to a cheaper location.”
There are early signs that rising sales volumes are reducing available stock, and the outlook for 2026 points to price growth supported by lower mortgage rates and a gradually strengthening economy.
“Property resellers may fare better in 2026, although a rapid turnaround looks unlikely,” Davidson said.
“Regions with strong affordability or tight supply, such as Queenstown Lakes and parts of the lower South Island, remain best placed to hold their ground.”
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