The number of properties being sold at a loss continues to grow, according to property data company CoreLogic's latest Pain & Gain Report.
It found 7.9% of residential sales in the second quarter (Q2) were made at a loss, up from 6.7% in Q1.
In the main centres, Auckland properties were most likely to make a loss with 12.6% of sales in Q2 fetching prices lower than the price they were previously purchased for, followed by Hamilton 9.7%, Tauranga 8.8%, Wellington 6.7%, Dunedin 5.2% and Christchurch 4.3%.
Among provincial centres, Palmerston North had the highest percentage of loss making sales at 13.2%, followed by Whangarei 11.2% and Nelson 10.1%.
Nationally, the median loss on the properties that sold for less than their purchase price was $51,000.
Of course that is the gross loss on price. The actual average loss is likely to be substantially greater once expenses such as agents and legal fees are added.
Apartments are far more likely to sell at a loss than houses,
More than a third (35.1%) of the apartments sold in Q2 were sold at a loss, compared to 7.1% of houses.
Of course if 7.9% of properties were sold at a loss in Q2, that means 92.1% of properties were sold at a gross profit, or at least broke even.
That's not surprising, because the median length of ownership for the properties sold for a gain in Q2 was 9.2 years, so a gain would be expected after that amount of time.
Conversely, the median length of ownership for the properties that sold at a loss was 2.7 years.
"Although most property owners continue to make a gross profit at sale, the recent softening in the market has shifted the balance of power away from sellers and towards buyers to some degree," CoreLogic chief property economist Kelvin Davidson said.
"The volume of properties on the market is already sitting at multi-year highs and is possibly set to rise further as some investors who are now Brightline Test-free, bring forward their cashflow-negative properties for sale.
"Buyers, particularly those with job security and sufficient financial resources to manage mortgage payments, could gain further leverage in price negotiations.
That means the resale performance achieved by current property owners could remain subdued in the next few quarters," Davidson said.
- 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.
99 Comments
If selling at a loss is a problem for people, don't sell! 👍🏽
….unless continuing to own is a bigger problem
Death, Divorce and De bank seem to get in the way of many well laid plans.
Hang on, the market is turning as we speak, up from here, yay! Capital gains!
I am starting to enjoy your new dry sarcasm Harvey W
According to Infometrics, the housing market downturn had a total peak-to-trough decline of 13.2% as at July 2024. House prices, however, increased by 60-70% in the 8 years from 2016-2024 - and are still almost 25% above their pre-Covid level.
Anyway, a cooling off in the market has been inevitable.
A good chunk of those selling property now will be doing so to untangle themselves from unmanageable debt levels. As has been cautioned many times before, over-indebtedness is bad for individuals, households, communities and the economy at large. That needs to be sheeted home to everyone, which is sound rationale for a "higher for longer" interest rate policy. When those over-indebted face market discipline, they must accept the consequences......
But for the great majority of people, with a sense of strategy and a bit of commonsense, its simply a case of riding out the current market downswing and reaping the long-term rewards (rental income / capital appreciation) which are part and parcel of property's track record.
TTP
The 13.2% Unadjusted for inflation. When taking into account the ~18% inflation over the same period means the real peak-to-trough is significantly higher
Inflation doesn't really come into it. Unless you got a 18% pay rise over the same period you are still worse off buying a house now. You are only really interested in the actual numbers not some hypothetical one. Its simple you have what you get paid and what the house costs and the gap has only got wider over the years.
That capital gain business ineeds treating with caution - it is mostly just a relflection of the way the way the value of money declines with inflation. Nothing much to do with an increasing need for shellter.
Tiny Tiny P___
I wondered when you would pop up with more spin than Tony the Comb
He is trying to reinvent himself over the next 24 months while the market bottoms so he can sound all sage and wise at the bottom.....
He is trying to reinvent himself over the next 24 months while the market bottoms so he can sound all sage and wise at the bottom.....
You may as well say "if the air is bad stop breathing".To much debt chasing gains not supported by yield. They have learnt that gambling and investing are quite different.
"median length of ownership for the properties that sold at a loss was 2.7 years" - November 21 to Jan 22 was a season of sour vintage for buyers.
The fundamentals had changed and the path had been charted up for inflation and OCR, a warning shot to highly leveraged prospective buyers
"November 21 to Jan 22 was a season of sour vintage for buyers."
There is likely a high percentage buyers in the 2020 - 2022 period who are selling, who have sold below their purchase price and made a loss.
Those are the buyers who got caught up in the residential property bubble - most likely to be buyers of property located in Auckland and Wellington.
Key stats would be % of homes sold at 2019 prices or below in my view. On another note I see the pictures are back with the articles, however now the text appears much smaller on my phone and I have to zoom in more to make it work and for comments. Anyone else getting this issue?
My God, Mike Hosking, is sooooo deeply addicted to the NZ Housing Ponzi...... He positively drools his chops for much higher homes prices. Tool.
Sadly for Mike, the Ponzi is dead in the water, on its way to -60% REAL losses in 2026/2027.
Buyers today, take -30% off todays asking prices, or die in future negative equity!
Mike Hosking massively overpaid for his house in Snells Beach. It’s near the rubbish dump. Pretty sure he bought it in 2018 and it would still sell at a loss.
He is a long time capital gain chaser. Ignore that bias in the face of today's reality and you will be fine.
Don't like him? Don't listen to him... easy.
LOL
I'm pretty addicted to it too. I've made millions out of it.
FIGJAM alert...
Wingman, you've just made even more enemies, if that's possible. Stating that you're doing well, is a cardinal sin in the eyes of the many envious, unsuccessful people here. (Good on you as far as I'm concerned).
I don't know whether that is true ... my off spring have made millions but don't parade it about like Wingman. They get thanks for the quietly efficient charity work they do.
I wonder if he wants a badge, or a chest to pin it on?
Exhibit "A"
Love Harry Enfield! Thanks for the laugh.
Very interesting to read that 4.3% of Christchurch sellers made a loss when they sold?
Personally can not understand this at all when prices in Christchurch havent actually dropped as such?
Personally do not anyone that has sold and lost money on a property at all in the last decade in Ch.Ch.
Would like to know what type of property that is being sold, has returned losses for their owners and how long they had owned them for?
Seems very odd!
Perhaps your personal reality is driven too heavily by bounded rationality?
People who brought Williams corp/wolf broke etcetera. In other words the same 2brm 2 storied shit boxes that when some one needs to sell at a low price sets the benchmark for all the same shotboxes that are exactly the same
In any field, there are always people who make bad decisions. In RE, there is a minority who overpay, then, due to circumstances such as divorce, moving etc are under pressure to sell quickly and accept less than they could get if patient.
Plenty of townhouse buyers will be forced to offload at a loss as developers are feverishly discounting their new build stock, and there is no longer a tax deduction premium built into the price of new builds. Anything bought off the plan in 2021/22 will be worth less than what was paid - those owners are now competing in the second hand market where prices for pre-2021 builds are much lower.
House down our street in Chch - good size 4 bed house, decent area, good schools. Was listed for 10% less than paid in June 2022. Didn't sell and went to auction this week and still didn't sell. Now re-listed at a bigger discount.
In 2021 some buyers were not able to ignore “ advice” from their parents, friends, workmates, agents, brokers and alike who advised them to buy before it was too late. Now they are paying for that bad advice. Unfortunately there will be more casualties as people lose their jobs or simply cannot cope with their outgoings including the Bank. Winter power bills are certainly hitting many people hard.
Wait until the retail power prices rise 20 to 40%, as the wholesale prices are just insanity......but are based on actual low hydro lake storage and future scarcity. Summer brownouts are now on the cards, unless is pisses down hard in coming months......
PDK is right, scarcity and high inflation, is 100% the future for NZ.
The 1970s are calling, wake up NZ.
Shane Jones on RNZ this morning gave me a headache. He had no solution so spent the interview using big words and meaningless woffle.
The price is a reflection of demand and available supply - he avoided that little inconvenience.
This will be bigger than a few pot holes.
He is a glutton for everything except solutions..
But it’s tax deductible right ? CGT works both ways ?
Perhaps not entirely equally under the Brightline. I checked this with IRD a while back & it may have changed however was informed that while gains must be paid in current tax return year, losses can only be carried forward against other future property gains.
Factor in interest cost, then tell us how many sell for a loss.
Don't forget the price of groceries, the hair dresser and the cat walker.
And inflation
Time for some crowd-sourced wisdom.
As we are all aware, time waits for no man, and the dumbthoughts clan is outgrowing its current residence (nice little quality townhouse in a more established area, close to Chch CBD - not one of your Williams Corp type builds)
We are looking at various properties, have a couple we would like to investigate more closely.
Balancing the need to actually secure something versus not wanting to overpay and risk big neggy equity if the downturn continues, what's do we think is a reasonable "discount percentage" to be asking for off asking price?
20%, 30%?
We are looking at properties that will last us a very long time (e.g. trying to skip from our FHB place to buying something that will last for as long as the kids are at home through to older age - we'd rather not have to move again)
We are only looking at asking price properties. Have no interest in spending money on builders reports etc to go to auction.
-30% off asking. Tell them it's the best offer and you will be walking in 3 days. Time limited offer.
Finacial markets and exposed DDDebt holder will be absolutely FRIED, later 2024 as the world economy craters into 2025.
"It will be stay alive through 2025" !!
When you have the buying power, use it.
Don't be the Soggy, Underwater, Ponzi-Deep DDDebt holders, useful idiot.
Thanks - I'd certainly be quite happy with the property we are most interested in at 30% discount to asking price!
Whats the market currently like there for good family homes? Down here in Dunedin good modern family homes that are realistically priced aren't lasting long on the market.
We decided there was no point in looking before we sold. To many ducks need to be in a row and you are in weak bargaining position when both buying and selling.
Took a big discount off RV to sell ours (couple of months back). That's was our opening position, not a pull back.
Sold within 3 weeks to cash buyer. The price received looks good now (not so much then) and we will be buying when we find the right place.
Cash is king.
Try taking 30% off your existing townhouse first and see how that sale goes.
We're not selling that one - we've got bugger all mortgage on it and going to be renting it out for cheap to some family members.
DT, don't listen to Gecko's advice of a 30% discount in Christchurch, he very clearly doesn't understand the Chch market.
Christchurch ain't Auckland and alot on here think only in Auckland terms and don't really know much about what is happening over the bombays. Even interest report only really on Auckland. Christchurch hasn't dropped in price but then it never really shot up like Auckland and Wellington. Pretty stable yes there might be some hurting bit those I feel are in the bulk 2brm/2storied William etc type. And as the article states the ones that have lost money are those who purchased within 2and half yrs. So as you stated you are looking for a family home long term. If you find something both of you like and can see raising your family there good school great parks etc etc. Then buy it. No one on here can predict 1 year ahead let alone 20yrs and what is that stable family home, your home worth to you.
The other thing about Christchurch houses, and you need to include all the nearby areas like Lincoln and rolleston as well, is the houses are warm and dry and have some land, an interesting number might be the average age of houses in every main centre. Christchurch would probably be less than 40 years, wellington 60 years, and Auckland 50 years.
In time christchurch prices may surpass both Auckland and Wellington, because they are newer warmer, stronger houses, thats what people want. Forget about apartments in christchurch, they are a different market, and shouldn't be distorting the numbers
Isn't the other thing you need to consider in Christchurch that it recently got destroyed by an earthquake and this could happen again. Which means 2 things:
Insurance is likely to go up significantly as reinsurance costs escalate due to global climate events.
Even if you're insured the money may not become available due to insurance companies folding under pressure of global claims?
Agnostium. And the rest of the country ain't on a fault line..... also notice Sth Island dosent seem to have the same weather events as Top of the north and Auckland coromandel Hawkes Bay
Fault line ain’t the problem. The quick sand Christchurch sits on is. Liquefied.
Rib raft sorted that out. And the three I own in TC2 land which pretty much is sand and liquid faction are all on piles so nor a problem. Including ghd new builds
You're my hero
About 6 months out from the Feb 2011 quake, the risk of a major earthquake in Welly was higher than Chch. There is no evidence of a previous major quake in Chch going back16,000 years. Welly averages one every 150 years.
Yes good point that a lot of the commentary on property seems to be Auckland-centric.
Christchurch (and I'm including the satellite towns like Rolleston and Lincoln in this) is an interesting market. Probably right that it never got so overpriced as the likes of Auckland and Wellington.
We are deliberately only looking at places in more established areas - not the never-ending suburbs/satellite towns. You can get a brand new 4 bed 2 bath in those new areas for comparatively "reasonable" money but the problem is that there is little in the way of amenities and schooling, you've typically got to drive everywhere (place we are looking at again this weekend is easy walking distance to shops, my wife's work, short cycle into town - and in the best school zones). The issue as well with the ever-expanding subdivision/satellite town houses is that there's always another, newer one available.
We aren't unrealistic in the sense we know you have to pay more for quality in good areas, but also want to drive the sharpest deal possible as it would be foolish not to.
Agree that the Williams Corp, Wolfbrook shite boxes are likely to suffer greatly value-wise. Too many of them, lots purchased as IPs because of the easier access to credit to buy new builds, unlikely to be maintained well. etc
I'd be looking at the properties you're interested in on propertyvalue.co.nz for a list of when they were last sold and how much for to gauge if they've had a quick turnover, especially since the earthquake, REINZ report for price drops from peak and map the areas from the report over the last couple years from the reports if you can. Track sold properties in the area and mark when, and if they are of similar style, era, space, this way you'll see what sells for more or less and why. Use the information you can get from anywhere you can (can always door knock down the street if you wish from the place in question) and compile it all into what you feel a reasonable offer is based on the stats and information gathered. Must be council maps of soil types etc you can dredge through to factor in risk in terms of natural disaster etc and factor into your potential offer.
Make sure you sell before you buy, inconvenient though it may be
Speed max that is not stupid but great sound advice. With money in the bank and finance sorted then all go. Bit of an inconvenience but we'll worth it
There isn't one discount figure you can apply to all houses you're interested in. You're better off accepting a 10% discount on a house that is sharply priced to start off with and that suits your needs really well, than accept 30% off, on overpriced house that is not ideal for you. Use your common sense (from your posts you've got plenty of it), and don't get limited by a strict discount % number.
Houses in the good school zones are still highly sought after, are selling for a premium, are in short supply, and dont last long on the market. If you can find a house with an advertised price that has been sitting on the market for a while, there is probably something wrong with it. My area peaked in Feb 2022, bottomed in Jan 2023, and is now back to record highs. So good luck wanting any discount on price lol
Depends on how unrealistic the asking price is
If you find a property that suits your every need and you intend to stay for a long time, just buy it. Chances are it won't come back on the market any time soon. It's not always about the price. You are buying a home not an investment.
It's not always about the price. You are buying a home not an investment.
Buying residential real estate for own use is the largest purchase for most households. It is also the main source of funds used to finance retirement.
Here are some financial calculations for owner occupier buyers to think about. The Peaker and Buyer Today.
How does this compare with a Peaker and a Buyer Today (BT) in NZ? (Assuming that the Peaker can hold on and is not under cashflow stress to sell.)
1) Peaker
The median house price at the peak for Auckland was $1,300,000
With an 80% LVR, this is a mortgage of $1,040,000
The 20% equity is $260,000
2) Buyer Today ("BT")
In 2021, the buyer who waited, deposited the same $260,000 equity into a bank deposit earning interest. Also BT would rent an equivalent house and have still saved money due to the rental being below the monthly P&I mortgage payments of Peaker - in 2 years the savings would have been about $20,000 annually. So a Buyer Today would have an amount of $319,349 to use as a deposit.
The current median house price for Auckland is around $1,040,000
Equity deposit of $319,349
The mortgage at this purchase price would be $720,651 (an LVR of 69%)
The Peaker has a mortgage which is higher by $319,349 (mortgage of $1,040,000 for Peaker vs $720,651 for BT)
Assuming BT, pays the same exact dollar amount each year that Peaker pays for their mortgage, as a result of that additional borrowing, Peaker is paying $856,632 more over the 30 years than BT (This is due to higher borrowing amount of $319,349, and total interest on this of $537,283 over 30 years). BT is mortgage free by the year 2042, whilst Peaker continues to pay their mortgage until 2051 (9 years later) - so after the year 2042, BT can save all that money that Peaker continues to pay on the P&I mortgage.
Assuming same incomes, and same living costs (food, travel, etc except mortgage) , BT can save the $856,632 in payments that Peaker is paying.
Remember that at the end of 30 years, the house price will be EXACTLY THE SAME for Peaker and BT.
BT will have more money available for retirement than Peaker. Conversely, Peaker will have less money than BT at retirement.
That single decision to buy in November 2021 would have cost $856,632 extra to buy the exact same house for Peaker compared to a Buyer Today.
Apartments are usually first fodder however Im not sure 35% of apartment sales would be indicative of a serious RE reset as one would need to know what % of those values will be 'issues' based drops . Theres certainly economic pressure /stock volume increases and rental/cv value distortions while average wages are not likely to be climbing enough to install much confidence even if interest rates pivot . Next year will be more revealing as to whether the declines will start cementing themselves . Present outlook is certainly bumpy and sitting on the fence likely the only option for buyers and sellers alike. Will the dam burst with large declines? Time will tell. Its still very much a Mexican standoff with cashed up buyers holding the reigns and likely those cashed up wont be in a rush to commit in the present environment. Banks are doing all they can to tempt more into the market but I hazard to guess that affordability flatlined long ago and wont be rebounding any time soon. Those that have bitten off more than they can chew will likely be seeking a miracle recovery via rapid unreasonable interest rate drops . Banks likely more exposed than they would like to be presently but they have the RE to dump if they have to . Mortgage sales nothing to be be concerned about . My guess is many are focusing on trying to ignite a puddle of water with wet matches.....lol
The trip log, keeping the dam largely intact, is yet to be blasted out......and only 30 to 40% real losses sustained so far.
When the trip log blows.....away the Ponzi Fully goes.
I don't think there's many here that would like to get rich, but if you're thinking about it, go and have a look around Kumeu, Riverhead and especially Westgate shopping centre and environs.
And do a bit of homework, there's a motorway going through there.
Unbelievable.
Only one doing booming trade at Westgate currently is Costco. Many others are on starvation diets/bordering on closedown the Shopville.
Thought you would be keeping a closer eye on the NW Auck Winger? I get out there more than you, it seems !! ?
Housing is an expense, not an investment. You cannot make 'loss' on an expense item
YES - and this expense to run a NZ ratbox house, is rapidly growing....
It's odd that this website which is about business and money, is inhabited by so many socialists.
I've taken a pretty big punt on Riverhead, adjacent to the border with Coatesville, so I've got my money where my mouth is.
Evey post you have is bleating about how great you feel you are for speculating on land in Riverhead. Why don't you just link to your developer website and get banned for advertising. You must be close to this point already.
I'm not advertising - I'm presenting evidence that the great kiwi property crash promoted by so many left-wingers here is somewhat true, but not entirely. There's pockets that are definitely on the move, it's just a matter of finding them.
I know that's hard to take for socialists, but if you care to do some homework, maybe you could make some money, but I guess that's just not for you.
Posts here that predict the property market's going to tank for years, and even in one rather odd case, until 2030, are nonsense.
Whats with the whole left wing,socialist stuff, plenty of right leaning folk in here think property has issues at the moment,stop making it a right vs left issue.
There's ALWAYS posts on this website calling for more taxes. Especially capital gains and wealth taxes.
Are you calling Australia and most other countries in the world Socialists? They have CGTs…
There's another tax that I temporarily forgot about that posters would love to see in NZ.
Death taxes.
Remember that taxes are a double-edged sword, in the event of catastrophic losses, those losses are deductible. . I can remember a classic case. Leading up to the massive plunge on the local stock market in 1987, the IRD thought it would be a good idea to tax speculators....until October 1987.
Everyone has a plan until they get punched in the face.
I hope you are subdividing rather then building on bare land, its going to be very touch and go recovering new build costs, let alone make money.
Being a professional punter myself I say good on ya mate. Not sure why you get such a bad rap on here. The trick is to have a go, and if it doesn’t come off don’t pack a sad. Not many people can say they’ve had a go. Maybe I’m just fortunate I get the same level of satisfaction from sitting on my front porch watching the sunset no matter what the bank balance is (it could be something to do with the day drinking, not sure).
That's exactly right Frank, I get a lot of pleasure building something I can be proud of.
Apartment owners may have ‘heads in the sand’ about ground rent increase – expert
When you read this in the news and you have a leasehold apartment, you might just sell at any price.
You lost me at leasehold. With interest rates having been been lower that most leasehold thresholds its just a financial suicide mission.Why people do it baffles me.
"Why people do it baffles me"
Many are attracted by the gross yield. Also many don't know what they don't know.
This owner is selling a number of leaseholds:
It is one of four leasehold apartments being sold by the same owner.
https://www.oneroof.co.nz/news/all-news/auckland-home-in-posh-suburb-ha…
"The closer they get to a rent review – most of them are reviewed every seven years but not all of them - the more people’s concerns grow about what will happen. There are many instances where the ground rent has doubled and this has completely crippled people financially.”
What's wrong with the New Zealand Residential Property market? This...
"PM wants $945,000 for his Auckland investment property....the asking price is $205,000 below the 2021 CV of $1.15 million" (NB: 2021 CV? Most of the rest of the country has been RV'd at a lot less than 2021 now?)
Because, and I could stand corrected on this - (many details are undisclosed to protect the PM's privacy, and probably the house itself) the property last transacted in 2007 for $339k. Same property, different Capital Gains Inflated house. Sorry. Capital Gains aren't Inflation are they..... They are a Tax Free Bonus for doing pretty much nothing.
Why aren't you doing it yourself then if it's so easy?
Borrow a million or two and pile in.
Borrow? Of course! Negative Gearing is another perk of the Game. Another thing wrong with the whole setup....
Go for it....I did it for decades.
But it's risky, something you might not be able to stomach.
You mean you kept your million or two on Term Deposit and used the NG to offset the Interest Payable? That's the spirit!
The whole System of Property Investment in this country is a mess.... One day, it will be corrected. The trick is not to be long property when that happens....But given the current almost evangelical belief in The System, a lot are going to lose everything they have or whatever they thought they'd have.
Oh. And as for stomach. Try having a budgeted target of $100,000 per day. Often losing millions on successive days, and still coming out to fight again to retrieve your Budget. Day after day. Month after Month, Year after decade. All on the back of what you 'know' will happen.
Reality check incoming. Having seen what happens to townhouse values, from family members lived experience in Vanvouver:
1. Buys brand new townhouse.
2. Townhouse developments continue to be built, better materials used, modern up to date designs etc etc.
3. Goes to sell 6 years down the track and low and behold, the new build price has barely moved. So the lower price for a 6 year old townhouse is dictated by the price of comparable new units.
I wouldn't be surprised if a massive chunk of the losses are sitting with overleveraged property speculators who simply can't afford the carrying costs (Insurance up 20%-40%, rates up 20%, Body corp fees up.
Townhouses built 2021 onwards had an automatic interest deductibility premium built into the price, over that of pre-2021 townhouses. That premium has now evaporated.
Recently built townhouses are inferior quality as well, as fly by night developers built absolute rubbish with no garages or backyards, no storage, tiny kitchens, and crammed in 6-8 tiny boxes per section. Who wants to buy these properties, when for the same or less money, you can buy a slightly older townhouse with a garage, a nice backyard, proper sized kitchens and bathrooms, and only 3 per section?
Lets be honest here, they are all shit. Most of the houses are bad enough but townhouses have been a catastrophic disaster and now we are building more of them than ever. Love this country we go from one cluster f**k to repeating it on an even bigger scale.
It looks like property prices will continue to fall in near future.
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.