One in four Auckland properties resold at a loss as national rate hits 14-year high

Summarised by Centrist

One in four Auckland properties sold for less than their previous purchase price during the September quarter, while almost half of apartments nationwide changed hands at a loss. 

New figures show New Zealand's property market has reached its highest proportion of loss-making resales in 14 years, with economists warning that inflation and transaction costs mean the true financial damage could be considerably greater.

Cotality's latest Pain and Gain Report found 15.8% of residential properties resold nationwide during the September quarter fetched less than their previous purchase price, the highest proportion since 2012.

The median loss was $60,000, although 84.2% of resellers still recorded a gross profit, with a median gain of $270,000.

Auckland recorded the highest proportion of loss-making resales among the main centres at 25.5%, followed by Wellington at 20.4% and Hamilton at 19.1%.

Apartments were particularly exposed, with 48% selling at a loss, compared with 22.5% of townhouses and 13.4% of standalone houses.

However, Property Investors Federation advocacy manager Matt Ball warned the figures understate the real financial losses.

He cited a property purchased in 2019 for $1.6 million and recently sold for $1.725 million. Although it appeared to return a $125,000 profit, Ball estimated it would have needed to fetch more than $2.1 million to preserve its inflation-adjusted value.

That translates into a real-terms loss approaching $400,000, before accounting for other ownership and selling costs.

Cotality chief property economist Kelvin Davidson said owners who purchased more recently were particularly vulnerable.

Properties resold at a loss had been owned for a median of just 4.5 years, compared with 10.4 years for profitable resales.

Read more at The NZ Herald

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