"You can't lose money buying residential property" is something that's often heard from property spruikers, but losing money is exactly what happened to 10% of the people who sold Auckland residential properties in the fourth quarter of last year.
According to property data company CoreLogic's latest Pain and Gain Report, 10% of the Auckland residential properties that sold in the fourth quarter of 2023 were sold for less than their purchase price.
Around the main centres the percentage of properties selling at a loss ranged from 3.5% in Christchurch to 10.0% in Auckland.
Outside of the main centres, the area where properties were most likely to be sold at a loss was Carterton where 18.2% of sales were made at a loss in the fourth quarter (Q4), while Timaru had the lowest percentage of loss-making sales at 0.7%.
Nationally 6.7% of sales were made at a loss in Q4 2023.
That was down from 7.6% in the third quarter of last year, but still well up from the market peak in Q4 2021 when just 0.7% of residential sales were made at a loss.
Apartments fared much worse than than stand alone houses, with just over a quarter (25.8%) of apartments selling at a loss while only 6.1% of stand alone houses sold at a loss. However the size of the loss was greater for houses, with a median loss of $45,000, while the median loss on apartments was $36,000.
The median gain for the majority of sales where the selling prices exceeded the purchase price was $303,000 for houses and $147,989 for apartments.
The main determinant of whether a property was sold for a profit or loss appears to be be how long the vendor had owned it for.
The median length of time loss-making properties had been owned by their vendors was just 2.3 years, while the median length of ownership for those that sold at a profit was 8.5 years.
That may be an indication that those selling after a reasonably short period of time may have been facing financial hardship, probably through higher mortgage interest rates, and had decided to cut their losses rather than struggle on.
The comment stream on this story is now closed.
•You can have articles like this delivered directly to your inbox via our free Property Newsletter. We send it out 3-5 times a week with all of our property-related news, including auction results, interest rate movements and market commentary and analysis. To start receiving them, register here (it's free) and when approved you can select any of our free email newsletters.
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.