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.
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.