Property data company CoreLogic's latest Pain and Gain Report has a little more pain and a little less gain, as more residential properties are selling at a loss.
The report tracks the percentage of residential property sales that fetched more or less than their previous purchase price.
In the first quarter of this year 7.1% of nationwide sales were made at a loss, up from 6.5% in the fourth quarter (Q4) last year. That, of course, means the percentage selling for more than their purchase price was 92.9%, down from 93.5% in Q4 2023.
The number of properties selling for a gain peaked at 99.3% in Q4 2021.
Whether a property sells for a capital gain or a capital loss has a lot to do with when it was purchased.
The median length of time that the properties which sold for a profit had been owned for was 8.8 years in Q1 2024, while those that sold for a loss had been owned for a median 2.4 years.
Location is also a factor, with 10.5% of Auckland sales selling a loss in Q1, followed by Hamilton 9.4%, Wellington 7.3%, Tauranga 6.0%, Dunedin 5.9% and Christchurch 4.4%.
The biggest median loss of -$80,000 was in Wellington, followed by Auckland -$69,000, Tauranga -$50,000, Hamilton -$45,500, Dunedin -$45,000 and Christchurch -$24,500.
Selling costs such as agent's fees and legal expenses would add to that pain.
CoreLogic chief property economist Kelvin Davidson said the softening in resale performance was consistent with wider market patterns.
"We've seen flattening property values since the end of 2023, as a result of stretched affordability and low gross yields, high mortgage rates and the rise of available listings on the market," he said.
"These factors are all working together to swing the market back around for buyers," he said.
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88 Comments
No doubt more and more houses are selling at a loss and this is likely to continue for at least the rest of 2024.
Why not headline that 7.1% are selling at a loss in NZ though? Headlining 10.5% loss in Auckland is true, but so is a loss of 4.4% in Chch. Choosing and specific area over the other is cherry picking for clickbait.
Because Auckland drives sentiment, not Christchurch
Or could it be because it's the data that shows the biggest increase?
But you agree the trend?
Yes, of course. That's why I said that "this is likely to continue for at least the rest of 2024"
I just like balanced journalism vs the ever increasing sensationalistic news.
I see it increasingly being the case and to hit PEAK LOSS in 2027/2028.
Then ebb for the next 5 to10 years........as a new peak is seen maybe mid 2030s, if rates ever get to around 4.5% again...??
Unlikely to get near 4%, with deglobalization and ongoing wars.
NZGecko, you are more DGM than Dgm!
Anyway, how are inflation and mortgage rates trending?
Does this account for inflation? If not, then this is a market in total free-fall.
Not to mention the unaccounted cost.. it's definitely a free fall
A quality, non biased comment from.... *reads username* .... "Houses Overpriced"
Focus on facts, and not to be blinded by usernames..
Erm, most people are still selling there house with no losses.
You mean, not making nominal losses when sales price is subtracted from purchase price, right?
Alas, that's not the real world where inflation, rates, insurance, maintenance, reno's, etc. etc., and selling costs like real estate and lawyers and moving costs/fees must be included.
"Focus on facts, and not to be blinded by usernames.." 😅😂
You aren’t really Evil, are you Yvil
Thanks. BTW, my Moniker "Yvil" has nothing to do with "evil", it's simply nickname based on my actual name.
Based on your actual name.. did that happen to be EVIL 😈?
Haha, my mum isn't that evil to name me Evil.
Don't get divorced guys.
or old
or sick
or behind in the mortgage
or need to move for work
or any other reason
in fact become a Spruiker and never sell your dream home.
Diamond hands.
Isn't it a pity life is conditional due to an asset being overvalued?
Commodifying housing was always going to end in tears
Too late!! (though it was still the right decision)
Timing couldn't have been worse though; by the time it was settled, RE prices had gone to the Moon....
'Selling costs such as agent's fees and legal expenses would add to that pain.'
Yes, take another 5% off that, plus any mortgage interest to date.
Yes and grocery shopping too.
Why not include other costs such as vets.. psychiatrist....
I imagine you would have quite a few bills for the latter.
That’s rich coming from you. The pot calling the kettle black.
Charming
by HouseMouse | 16th May 24, 1:57pm
You aren’t really Evil, are you Yvil
The Evil is getting the better of you today... can't be, because you are 😈
Remember to take off petrol you paid living there, instead of renting closer to work. Good lord not looking good!
I wonder when the media is going to start talking about negative equity..... maybe an Xmas BBQ discussion
I was in the UK as they came out in 1995, was interesting to watch, I think they went in about 1989-90 after the 87 share crash
Does anyone know how countries that have a capital gains tax deal with a capital loss? Do governments expect a loss= 0 refund?
Couple of observations from this 'owner of multiple properties' ...
"The median length of time that the properties which sold for a profit had been owned for was 8.8 years"
Observation: Would that be around the aftermath of the GFC? CN's completely right about timing purchases. (Yeah, I know it's a median. But my analysis is more detailed so I can find those making the best nominal gains against when the purchased.)
"Location is also a factor, with 10.5% of Auckland sales selling a loss in Q1, followed by Hamilton 9.4%, Wellington 7.3%, Tauranga 6.0%, Dunedin 5.9% and Christchurch 4.4%."
Observation: LOL - location is always a factor! But more so at a suburb & property attributes level. And by property type.
"The biggest median loss of -$80,000 was in Wellington, followed by Auckland -$69,000, Tauranga -$50,000, Hamilton -$45,500, Dunedin -$45,000 and Christchurch -$24,500."
Observation: Yields are improving! (Especially for certain property types!)
A medical specialist I know of is trying to sell his house for the fourth time in Auckland, now it's 1 mil less than what he was initially seeking. A big ouch!
4th time? In how long? Doesn't sound like a committed seller. They might be better just to wait. Winters don't last forever.
"Winters don't last forever" don't be like TTP.. It could be permafrost before you know it!
I've spent all my life studying economic downturns - from the 1700s until now.
While they all are subtly different - all are caused by 'people who know better' or 'should know better, but clearly had brain farts of epic proportions'.
Trust me. They all end. (That said, this one is far from over.)
Comments like "It could be permafrost before you know it!" are from the wild conspiracy camp.
Of course, when you stretch the timeline far enough, everything will be back to normal!
What are your thoughts on the similarities between now and the 1974-1980 period in New Zealand?
Same same.
"I've spent all my life studying economic downturns - from the 1700s until now."
Interesting.
Just NZ? or other countries? If beyond NZ, which countries?
Everywhere I've lived where a university offered economic history papers and/or allowed me to do them remotely around my unpredictable work schedule.
I heard of a guy who bought a house for $1.8 Mill, tried to sell it for $1.5 Mill, couldn't, got an offer for $1.2 Mill, didn't take it, now he's willing to pay any buyer $500 k to take the house off his hands. Poor bugger, imagine his losses and the pain!
On trademe, there's few decent size apartments for sale with asking price of at least 100K below CV and almost the same purchase price many years ago.
key word "apartments" aka in NZ that means don't touch them with a ten foot pole as they are more likely to never hold value, they are simply a vehicle for rental income. For some investors who put up high rents that is ok, but many want assets or property to have value too. Hence many of these things have gone through massive cycles of selling for $1 reserve, escape at all costs especially from foolish investors trying to escape remediation costs. Owner occupiers in apartments are triply screwed.
Just donate 500k to a charity.
Did your medical specialist receive any offers in the the previous listings he would accept now?
If yes why did he not take the offer. Was it...
A) greed
B) he believed the lies of oneroof, agents etc
C) didn't realize 2% debt was a super bubble
D) all of the above
An owner/occupied house just like rent, is a cost. In contrast an investment generates cashflow. How can there be a "loss" when a house is not an investment?
An astute observation.
An OO buying and selling in the same market for the same value, or buying at a higher value, are going to be fine. (Those trading down will miss out on a bit though.)
And with such a dismal superannuation system here in NZ, we are very vulnerable. The house is all many have, perhaps a small Kiwi Saver as well.... Its way past time that KS should be mandatory and should be 10% for young people as they enter at 18yo.
NZ is very very vulnerable to the coming house price correction as people feel the paper loss as hard as if they saw the amount of there kiwi saver falling..... after a big gain, ie a paper loss, even if the sharemarket tanks 40% , now in NZ another 20% off houses will have a way bigger impact on sentiment and future spending patterns,
IE We all felt rich in Nov 21, now not so much....
Many felt more poor during 2021. Those that have been priced out of the market are increasingly feeling more hope for the future, the further the market falls. Might actually incentivise them the save more and spend less.
Those with high debt are feeling the hangover, many may have swapped to interest only to tread water for a while and buckle the spending. Others saved up hard when the times were good and got better paying jobs to add to their saving ability, and invested to grow these gains. It is interesting to see the different choices different people make in life. Newish 2nd hand Ford Ranger prices must be dropping off a cliff.
The US system turns out to be quite favourable in that you have both a KiwiSaver system (IRA's & 401k's-or a Company or Government Pension Plan) in which contributions are not taxed-so you save 20% to 30% each year in current taxes just on your contributions, and then more importantly the Payroll tax collected on every dollar earned up to $130,000 or so per hear is taxed at 7.2% (and matched by your employer-or you in self employed). Thus upon retirement instead of a fixed "Super" amount you collected in accordance with contributions (and your wife gets 50% of what you receive (unless she was a super earner herself, and then she would collect on her own account). Bottom Line- Annual Social Security payout in Kiwi Dollars for husband and wife can push well above towards NZ$90,000 @ $.58 US to NZ $1.00. And then comes your draw from IRA/401k as well.
NZ is way behind in taxing contributions to KS and any other private pension. I suspect the rationale 50 whatever years ago in times of inflation the govt didn't want a tax dollar 40 some years into the future where they expected it to be in real terms much less than not taxing contributions upfront
By house typology?
Apartments and small / poor quality town houses I would guess.
Nope. Pretty much across the spectrum of housing types.
Take care drawing inferences from areas where apartments / townhouses dominate as such properties tend to be more about yield growth than capital gain. ('House sized' apartments and townhouses are still doing okay in the grand scheme of things.)
The numbers are what you would expect. You would only be making a loss if you bought at the market peak over the last 2 years or so, why is this a surprise ? The idea is you buy and hold, you need to be in the game for 10 years at this point. I bought at the end of 2020 and am still way ahead.
"I bought at the end of 2020 and am still way ahead"
Yeah sure you are Zwifter, pull the other one. One day, on the back of rising rates, you're on here touting you're loaded to the gills with TD's, the next trivializing the downtrend in property prices. And as for your "August to October-2023 was the last opportunity to buy" Hmmmm-well.
Seems you couldn't keep it real even if you tried - LOL!
I guess my financial situation is different to most. Bought the house with cash so no mortgage and the rest in a TD at 6.26%. It costs you $700 a week now to rent a house in my street so you do the math on what I didn't need to waste on rent over the last 3+ years, so yeah I'm like $200K ahead. By the way my prediction of the low was correct right up until today, I never said it was going to be the possible low forever.
beep beep beep
Zwifter - yes for sure, there's nothing like owning you're own home outright. That aside, lets count the $$ compared to your $700.00 rent saved and (based on say a 4% rent yield) assuming you did pay "cash" for a say $900K house. I'd say you've foregone interest (6.26%pa) of at least $725.00 pw (after 33% tax). You've also inherited the pleasure of paying an extra say $120.00 pw extra for rates and insurance on top = $845.00. This is without taking into account this asset is declining in value too. You're at least $145.00 per week worse off. Then comes the maintenance. For those with large mortgages, the sums are done and it's cheaper to rent than to own.
Well TD's were paying like 0.5% when i bought the house, they have only rocketed to 6% over the last year. Sorry way ahead financially and that's before you even factor in the mental benefits of owning your own home which to me are pretty much priceless. I appreciate everyone is different, for me it was a no brainer.
If you really did appreciate everyone's situation is different, instead of Spruiking, your words to those thinking of borrowing up large would read as if they'd been posted by someone with a social conscience and voice more caution. There are no mental health benefits from the financial and emotional distress derived from being overdue on ones mortgage.
The bank is the Landlord.
Yep very interesting. I never heard Zwifter say now is a good time to buy if you can buy your property without a mortgage and don't care about it's value declining...
You may be right in that equation in the short term, but what would worry me is that we rented our house in 2003, and the market rate was $270wk, whereas today the same house 21 years later would cost a renter no less than $950wk-likely more. Entering retirement with 20 years to go -or so with escaplating rents over time doesn't appeal to me, and I would think most would feel the same. That Invested Principal would not likely cover the 300% or more rent cost increse over a 20 year time frame.
Cool, so he's $145 a week worse off..... during perhaps the worst property market in recent history. And he's got a home to live in that'll go up in value when the market turns.
The maths has been done on this, and owning is almost always better than renting, unless you're looking at little 2 year snapshots cherrypicking the end points to load the dice in favour of renting.
Why not free up land consenting and buy a house to live in knowing it wont go up that much as more land is available ... invest in shares and bonds of PRODUCTIVE companies as your investment for retirement..... I know its a strange idea.
This definitely could be the new reality if Govt. can follow through on its promise.
This is the way it happens in other jurisdictions that have affordable stable housing and strong economies.
Nobody is 'way ahead' at this time.
Very few properties are selling at this time for more than a 5% gross nominal per annum capital gain. (Adjust for inflation, rates, insurance, etc. and most are getting way, way less.)
Front up with the facts behind your claim, Zwifter, or you're well and truly in the spruikers camp.
Wow Zwiffy, Your a great Property Apprentice, Propellerhead Property, Invest or Nest and student of the ole ferret TTP.
Keep spouting the old mantras of the last 40 years of forever lower Dddebt prices (now void) Buy and hold, hold for 10, Double every 10, These are now all void and no longer apply.
New world emerged in 2021. HFL became HFE.
DEBT FUNDED asset reprice only part way through. Thousands of years of financial history teach us this.
Can you be sure we aren't still enduring the peak? We may be tipping over the other shoulder now.
Yep the Spruiksterland types are living their best lives, oblivious to the actual realife: "Bull Trap" " Return to normal" times.......
Stages in a Bubble | The Geography of Transport Systems (transportgeography.org)
"More than 10% of residential property sales in Auckland are making a loss"
I'm sorry this is literally impossible, you can't lose with NZ housing, I have been told this repeatedly on this site. Please go back and fix your calculations.
I work in agriculture, which unfortunately attracts people more towards the lower end of intellectual ability, and I am constantly astonished at how little people understand about basic concepts like compounding interest. The belief that you can’t lose with houses is a mantra repeated from parent to child in a significant portion of the population. These are the people we read about in “stuff” and such like that are genuinely surprised and aggrieved when they can’t pay their mortgage. But I can’t lose!
People selling house at a loss today is much better than going deeper into negative equity, the ones who manage to hold on could see a profit in the 2030;s
If you have enough equity its not a major as you buy sell trade in the same market... for those who have to get out say due to divorce etc,
if you went in with minimal equity , its entirely possible you have negative equity.
#Prenup baby!
This is not a good time to sell, if you can hold your breath till Feb 25, you might get an additional 10-15% for your property.
Once mortgage rates start to reduce, we might see a big jump again and renting isn't going to be cheap anytime soon, for 3 beds in Torbay you might need $800 per week
might and hope are not a strategy
I could just say we might see a big drop and all the spruikers ask for evidence.....
that 10%-15% is pulled out of your A@@
all you need is the clown costume
so look for a townhouse or apartment. 15% off for a free-hold house?! in your beautiful dreams!
John, I hate to break it to you but head into the western bays and ask Pt Chev or Westmere, Ponsonby etc and ask Agents there how big the losses are on 2021 purchases of $2.5mil to $4.5mil houses (freehold) who need to get out now. I think you would be astonished.
The Median & Average Prices have dropped 25%.
that B&T Ardmore one in Ponsonby was I think about 27% drop
Or a greater increase in educated youth exit to Straya. We should be striving to keep future tax payers here not driving them away.
Only 10%?! that is real real low, against the worst intentionally stimulated artificial peak in generations.
Let's revisit that comment in 6 months time, ay?
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