Georgina Bond
New Zealand’s residential property market is delivering its weakest resale profit margins in more than 10 years, as lower valuations and high stock levels continue to give buyers the upper hand.
According to Cotality NZ’s latest Pain & Gain Report, just 89.4% of properties resold for more than their original purchase price in the year to June 2025 – that’s down from 90.7% in March and is the lowest rate since mid-2014.
While most vendors are still realising capital gains, the trend reflects a market still adjusting to higher interest rates and post-pandemic price corrections, Cotality says.
Its July Home Value Index shows national property values remain more than 16% below their late-2021 peak, despite recent signs of stabilisation. Nationally, the median resale gain was $279,000 in Q2, well below the late-2021 peak of $440,000, while the median loss was $52,500.
“Nearly nine out of 10 resellers are still making a gross profit, which in many cases is a substantial amount of money,” says Cotality NZ chief property economist Kelvin Davidson.
“However, the results reflect the fact that values are still well down from the peak in many areas and buyers with finance approved continue to hold most of the pricing power.”
Hold periods – A key factor for investors
The median ownership period for profitable resales hit 9.4 years in the June quarter, the longest since the mid-1990s. By contrast, loss-making sales typically occurred after just 3.5 years. For investors, Davidson says this reinforces the importance of longer hold periods to ride out cyclical volatility.
Houses still outperform apartments
Standalone houses continue to deliver stronger returns than apartments, though both segments have weakened. In Q2, only 9.8% of houses resold at a loss, versus 33.8% of apartments.
“This should not be interpreted as a sign of collapse in the apartment sector, however. The tendency for apartments to see less price growth over time always means they’re at a greater chance of seeing gross losses, especially if resold into a weak market,” Davidson says.
Median resale gains for houses were $276,000 compared with $110,750 for apartments, while median losses were broadly similar at $50,000 for houses and $55,000 for apartments.
Importantly for landlords, the rate of investor resales at a loss (10.7%) remains close to the owner-occupier rate (10.1%), suggesting there is no evidence of a large-scale investment exodus, despite recent tax changes and interest rate pressures.
Regional and city insights
- Christchurch showed the strongest resilience among the main centres, with only 4.9% of resales at a loss (well below the national figure of 10,6%).
- Auckland recorded the highest proportion of loss-making sales (15.9%) but also some of the largest absolute gains for those who bought well before the peak (median $350,000).
- Queenstown remained the standout regional performer, with just 3.6% of loss-making sales and a median gain of $565,500, underpinned by limited supply and premium buyer demand. “Queenstown’s unique mix of limited supply, strong domestic and international demand and high-end property has underpinned its resilience,” Davidson says.
Investment outlook
Davidson expects results for the rest of 2025 to align with broader movements in property values, migration trends, the labour market and credit conditions.
“Even if property values stay broadly steady in the next few months, the share of loss-making resales could still edge higher, given that reduced seller confidence may just see them more willing to meet the market,” Davidson says.
“However, stronger sales activity, gradually tightening stock levels and renewed interest from first-home buyers and active investors could start to reduce those loss rates, with affordable and supply-constrained regions best placed to outperform.
“Keep in mind that the gross profits of $279,000 in Q2 may look large but for many owner-occupiers, this generally won’t be a cash windfall. Provided they’re not shifting to a cheaper location or downsizing, that equity will just have to be put straight back into the next purchase.”
0 Comments