More homeowners are selling for less than they paid. Property data firm Cotality says 15.8 percent of the homes resold in the September quarter changed hands below their previous purchase price, the highest share since the third quarter of 2012.
The figures come from Cotality's quarterly Pain and Gain Report, released on 12 November. It compares each resale price with what the seller originally paid.
Where are losses most common?
Auckland had the highest share among the main centres:
- Auckland: 25.5 percent of resales made a loss
- Wellington: 20.4 percent
- Hamilton: 19.1 percent
- Tauranga: 15.3 percent
- Christchurch: 7.5 percent
- Dunedin: 6.9 percent
Losses were also bigger in the two largest cities. The median loss was $89,000 in Auckland and $78,000 in Wellington, compared with $60,000 nationally.
Cotality chief property economist Kelvin Davidson said population falls and economic uncertainty had weighed on Wellington, "while Auckland has seen a steady rise in housing supply". The weakness of apartments had affected both markets, he said.
Are apartments the worst hit?
Yes. Almost half (48 percent) of apartments resold in the quarter went for less than their previous purchase price, compared with 22.5 percent of townhouses and 13.4 percent of standalone houses.
Davidson said that figure should be read with care. Apartments are a relatively small part of the market, and the share of loss-making apartment sales was "inflated to an extent simply by the drop in the overall number of transactions". The typical loss on an apartment was about $60,000, the same as on houses.
He told RNZ that quality and location also matter within each type. A narrow townhouse with limited access and no parking in a weaker location was more likely to sell at a loss than a well-located, good-quality one.
Does how long you own a home matter?
It is the clearest pattern in the report. Homes resold at a loss had been owned for a median of 4.5 years. Homes resold at a gain had been held for a median of 10.4 years.
"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," Davidson said.
Investors were slightly more likely than owner-occupiers to sell at a loss, interest.co.nz reports, at 16.4 percent of their resales compared with 15.0 percent.
Is everyone losing money?
No. More than four in five resellers (84.2 percent) still sold for more than they paid. The national median gain was $270,000, and in Auckland it was $341,000.
Across all resales in the quarter, Cotality counted $3.6 billion in gross gains and $179 million in gross losses.
The figures are gross. As interest.co.nz points out, they do not include selling costs such as agent's fees, which would make losses bigger and gains smaller. They also leave out other costs of owning a home, such as mortgage interest, rates and renovation spending.
Is this a sign prices will keep falling?
Davidson said it was not. "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."
He noted the share of profitable resales had taken four to five years to fall from around 99 percent at the peak to 84.2 percent. During the global financial crisis it fell much faster, from about 98 percent in mid-2007 to around 80 percent by early 2009.
National values have been falling for months. Cotality's latest monthly index put the national median value at $790,987 in October, as we reported in our look at October house values. Supply is also high. October had the most homes for sale in any October since 2014.
What does this mean if you're buying or selling?
Davidson told RNZ it was "not a great time to be a seller" but, "on the flip side, great time to be a buyer".
For buyers, the report shows how much the length of ownership matters. People who had to sell within a few years were the most likely to lose money, so it is worth thinking about whether a property would still suit you if your job, family or finances changed.
For anyone thinking of selling an apartment or townhouse bought in the last few years, the figures suggest getting an up-to-date appraisal and checking recent sales of similar properties nearby before deciding on timing.
