Georgina Bond
Nearly nine in 10 New Zealand homes are still selling for a profit, but owners are waiting a lot longer to cash out as the housing downturn drags into its fifth year.
New figures for the March quarter from property data company Cotality NZ show homeowners who sold for a profit had typically owned their property for 10 years, matching the longest hold period on record.
Cotality’s latest Pain and Gain report found 87.8% of homes sold for more than their original purchase price, although that remains well below the late-2021 peak of more than 99%.
Cotality NZ’s chief property economist Kelvin Davidson says the figures pointed to a market stuck in a holding pattern.
“Property values may have edged a little higher in recent months, but the market still looks pretty subdued overall,” he said.
“Sales activity has been soft to start the year, listings remain elevated and with uncertainty around the Iran conflict still very high and mortgage rates potentially drifting upwards again, it’s difficult to see anything other than another fairly sluggish period for the housing market.”
Investors absorb larger share of losses
Investors and shorter-term owners are still under the most pressure as higher mortgage rates and lower prices continue to weigh on the market.
Investors recorded a higher rate of loss-making resales than owner-occupiers in the March quarter, with 13.7% of investor resales sold at a loss compared with 11.1% for owner occupiers.
“Investors are generally more exposed to apartments and shorter-term market movements, so historically they tend to record losses a little more often than owner-occupiers,” Davidson said.
“Higher mortgage rates, insurance costs and other holding expenses have made yields tighter for some investors, particularly where rental growth has slowed or values haven’t moved much.”
Apartment owners were hit hardest, with 41.1% of apartment resales made at a loss compared with 11.3% for standalone houses.
Auckland and Wellington remained the weakest of the main housing markets, with almost one in five Auckland resales recording a loss in the quarter.
But despite the prolonged slowdown, Davidson said there was still little sign of widespread forced sales
“There’s still little evidence of widespread distressed selling or fire-sale behaviour. A lot of these losses are relatively modest in the context of total property values.”
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