The percentage of residential properties being sold at a loss has increased for the second consecutive quarter, according to property data company CoreLogic.
And the average profit on properties being resold at a higher price than they were bought for is also in decline.
CoreLogic's latest Pain and Gain report shows that on average, New Zealand home owners resell their homes after seven or eight years.
So it's no surprise that most still make a substantial profit when they sell.
However the number that sell at a loss, while still a small proportion of total sales, has started to increase. It has risen from 0.7% of sales in the December quarter of last year, to 0.9% in the March quarter of this year. and now 1.9% in the June quarter of this year.
Over the same period the median profit on resales has steadily declined from $440,000 to $370,000, a $70,000, or 15.9%, decline over nine months.
The median length of time the properties that sold at a loss had been owned by their vendors was 1.3 years.
CoreLogic NZ's chief property economist Kelvin Davidson said the results were not too much of a surprise, with mortgage interest rates increasing and a surge in the number of properties being listed for sale, which had shifted the balance of power from sellers to buyers and caused average property values to decline.
Davidson said the figures marked a "turning point" in the market.
"The softer performance of property resales in the second quarter of 2022 is evident across most parts of the country as well as property types (houses v apartments) or owner type (owner-occupies v investors)," CoreLogic said in its report.
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110 Comments
Aussie housing market weakness. No cashed up developer snapping up houses with land.
The median length of time the properties that sold at a loss had been owned by their vendors was 1.3 years.
And so it begins....
What begins?
2 people sell their house for less than they bought it for.
98 people sell their house for more than they bought it for.
That's how it begins.
Again, what begins?
n+1 people selling their house for less than they bought it for.
IT !
This is a lagging stat. In the current market this will be continuing. Forget rates starting with a 7, reckon we could see an 8 in 2023.
Sure, so we might get to "only" 96% if people making money in the middle if a serious downturn. Com'on, give me a break!
Lets be clear on this. They are losing money in the downturn. For most, the money lost in the last year is smaller than the money gained in the big run up prior to this downturn. In any reasonable assessment, they have still lost money in the past few months.
Yes, let's be clear, it's true that 1.9% of home owners have lost money.
Let's also be clear, it's also true that well over 90% have made money.
And some are even
No, that is false. Virtually 100% of home owners have lost money in the last few months - including myself as Chch has turned over now.
For some reason, when assessing the market you are choosing data that only includes those who have sold recently, and pinned to whatever date they happen to have bought the property. The price series are a much better indication of what is currently happening.
Simply this is not the case for most, sure you may have lost money ..feel for you in your case. However generally you still will be a rare case in the Chch. market, at the minute, as it has only shown movement down last couple of months and now lower trading volumes, are you basing it on a realised loss from original purchase price or what you could, in theory sell at the peak?
I should say, my house is currently worth more than I paid for it but less than it was a few months ago. Therefore, I have lost money in the last few months, but not in the last few years.
I could close my eyes and only look at the absolute change between purchase in 2019 and today, but ignoring the reality of the last few months doesn't change it.
Similarly, when I look at the performance of my shares I do not just look at current vs purchase price as that would ignore important information.
Nah come on MFD. You're only allowed to talk about "making money" on housing when the equity increases. When that equity shrinks, it's not a "loss" because people pretend it never existed to save face.
Hiw much have you "lost in the last few months"
Chch is down about 7% from peak, so I guess around $50k. I have another property in the UK but prices haven't really fallen there yet, and it is currently under offer.
Come on. We all know that nobody loses or gains money on a property unless they sell it. The poor sods who sold their houses at a loss are a very small percentage of home owners. If my house gains or loses over a million in the last 15 years, I have not gained or lost that money unless I sell. You all know that, and are just counting angels on a pinhead to while away the time, and to argue with people you have never met.
Usually the poor liquidity of housing is seen as a downside, but I guess it makes it easier to hide your head in the sand. Do you feel similarly about shares you hold? Doesn't matter if they crash unless you sell? I do have an interest in what my assets are worth right now, so that I can keep my portfolio balanced and track how things are going.
Admittedly it is pretty irrelevant to those who own one home and want to continue to hold one home as their exposure will be pretty constant. Anyone with more than one home should be paying proper attention.
You might have missed the important stat;
The median length of time the properties that sold at a loss had been owned by their vendors was 1.3 years.
In other words, those losing money are those that bought around the peak - which nationally was Nov 2021;
Median price - REINZ | interest.co.nz
I suspect of the owners that purchased within the last two years - and have had to sell in the current market - just about 100% of them are taking a loss. ... And then there are those not selling even though they are price listed at under their previous purchase price.
I don't think it is at all helpful to minimise the significance of this decline for recent purchasers. Many sadly find themselves in quite dire circumstances. Not at all unlike the GFC situation in the US - only thankfully our banks aren't as ruthless as those in the US where mass foreclosures occurred. Fingers crossed things don't get a whole lot worse.
It also doesn't state if the selling price is before or after agents commission
Or accounting for any work done. If I spend 100k doing up a property and sell it for 80k more than I paid for it, I'm not as happy as CoreLogic might think.
Never pass up the opportunity to question the facts using your one eye mate. Are you an accountant mfd
Nope, I'm a Scientist. I spend a lot of time looking at and thinking about data, so I get offended when people misuse it and try to correct misunderstandings.
Some people here are scared to acknowledge the possibility that house prices could stabilise in 2023.
TTP
Some people here are scared to acknowledge the possibility that house prices might not stabilise in 2023.
Teeter, Teeter, Plummet
If the house prices fall, people will be rushing in to snap up the bargains. Over the last 150 years in NZ, every property downturn has seen a return to the high prices a few years later. A lot of people are already ready to buy, but are just waiting in case the bottom is not there yet. Also a lot of FHBs have been holding off lately, who have to buy at some stage. NZ property market won't be dull over the next year or two.
Maybe true but houses were affordable then. Not affordable now.
Even if they were to stabilise in 2023 (I actually think they will, in the second half of 2023), there's still 5 months of data, and probable house price falls, left in 2022.
Yeah I think there’s a reasonable chance they’ll stabilise by second half of 2023. I also think there’s a reasonable chance of a further 20 - 30% fall before then
Again no surprise. Regions always follow Akl and Welly, which are in free fall.
Those putting lipstick (quick paint) on a pig (old rotbox) and the trying to flick for a cool 100k profit are being caught by the rapid retreat of the tide of cheap debt. Same for those who overpaid on the back of 2% interest rates somewhere thriving like Turangi are in trouble. Got quoted by an agent the other day..."but it will be worth this again one day" which translates to "please bail my vendor out so I get paid".
They hung up when I requested they stop embarrassing themselves....
Turangi a cheaper version of Taupo
Turangi is Tokoroa with a lake view - (I lived in Turangi before!)
Grab that trout fishing hidy hole at the bottom !!!!
Hey Averageman. Most agents can smell timewasting tyre kickers a mile off. But in your defence, you are behaving as if you think the market bottom is nowhere near the current figures being asked. Very sensible.
Core Logic late to the party again!
CoreLogic are just doom and gloom merchants.
Because... they report that 98 out of 100 people sell their house at a profit ???
Lol
Still house prices fall is not as should be......Still a long way to go.
Many sellers are holding to their price though houses are not selling and market feedback is much below the asking.
Question is who will blink first, vendors or buyers (chances of buyers blinking is minimmum as prices are still high and FOMO is missing).
Even mortage sell are not selling though bank is suppose to sell at best price available in current market as primary goal of bank should be to recover the money with minimum loss.
It is wait and watch.
Since the Royal Commission they also have a considerable duty of care to their clients. Less so with Investors but for FTBers they do not want to see TVNZ 6pm news of them being thrown into the street. Things have changed, anyone having to to sell late 21 just did an Auction. With the gap between vendor expectations and buyers so wide even open homes will become pointless soon.
Do we really need these agencies telling us what we already know...
Show me an investment that has a 98% chance of going up in value in a downturn, whilst being able to enjoy the benefits of living in it.
Show me a statistic that's 100% made up
As the housing crash continues more people will see deposits disappear and depending on when they purchased negative equity comes into play.Anyone who purchased a property in last five years will see any paper profits disappear.
Hi DTRH,
What crash?
The housing market is undergoing an orderly correction - following a sustained period of buoyancy/ rising prices.
This was not unexpected. And nor is recovery unexpected.
TTP
It was unexpected to you TTP. Looks like you aren’t preparing for the crash in total denial, the prices will be down 20% by end of year and will continue tumble.
What is your criteria for a crash?
Might be better to ask what TTPs criteria for a correction is…
Found it - https://ibb.co/m0NcPGv
So, what's this...football, OK humans cooperating moving the thing, maybe going to trip and will be funny...no, not yet...Oh! "Moving the goal posts".
Took me about 80 seconds. Thx.
20% would be a crash (some areas might have already hit this target) , this downturn will cause a much bigger drop over coming years. We are also at risk of NZD tumbling keeping inflation high, whatever the FED does will decide our future rates and chances of them not continuing to climb is very low as USD could lose its status as reserve currency it FED goes back to loose money policies.
If the dollar tumbles and inflation increases, therefore the new house building prices will rise accordingly. Therefore equivalent secondhand houses will also rise by the same amount. In the near future, bargain hunters and FHBs will reenter the market, and away we go again. All those property owners who were able to hang on, which is most of them, will then take advantage of the inflationary trend. The 1980s were a classic example of this. We bought a few properties, were able to withstand the '87 crash, and were away again in the subsequent recovery. Happy days.
That's just your opinion, no one knows what will happen in the next few years
TTP does - see his post above. So are you going to call him out as well in order to be consistent?
A camper van plated with rare metals? I don’t know, but it’s not real estate. And this article/report certainly doesn’t state as such.
Everyone’s losing, it’s just that some have further to go until they’re in the red, because they bought earlier in the bull market. Give it time.
No. Only those who actually sell for less than they paid will have lost. Most will hang on, as they did in every other downturn in the last 150 years.
Still a lost opportunity to sell high.
a caravan
I love this no-nonsense yet pertinent answer Yvil
https://www.stuff.co.nz/business/property/129559352/hundreds-of-landlor…
Houseworks, just a little light reading to help you to reflect.
Excuse me what are you talking about?
Now old man the discussion is about capital gains and losses on properties that have been sold.
Titchy.... fair enough too. Its getting harder to find good tenants. You need to look after them. Many Boomer Landlords are considering other options. This is no doubt pressuring prices.
HW2 - how big is your property portfolio?
https://www.stuff.co.nz/business/opinion-analysis/129564357/build-to-re…
On this forum over three or so years he has accumulated one in every town and city all out of the equity of one Hamilton property - Extraordinary :)
Good attempt at some humour old man. Try doing something nice for someone today instead of cheap jibes, and it could reward you
The conversation was about buying and then selling at a loss. Capital gains and losses are a totally different discussion.
IO you often like to ask others personal questions, why don't you reveal a bit about yourself? How many properties do you own? What do you do for a living, if anything?
"What do you do for a living, if anything?"
Yvil at times you come across as thinking you're superior to others.
Please feel free to label me childish or whatever :)
Surely you realise this is not true? We know that the value of houses has fallen from house price series like REINZ and CoreLogic.
This data does not reflect house prices rising, it just reflects the fact that most houses sold today have been held for more than a year. It tells us very little about the current or recent direction of prices.
Even in the teeth of the Covid stock crash I could have sold many of my shares at a profit because I'd held them for a while. This doesn't change the fact that most of them were worth 20-30% less than a couple of months prior.
When the YoY house price index hits red, the media turns to decade on decade.
House prices still up since the 1700s!
Hahaha
"a 98% chance of going up in value in a downturn"
Been drinking before lunch Yvil?
(nothing goes up in value in a downturn...)
nothing goes up in a downturn.. that is the silly comment of the day
IO, the greatest deals are to be found in a downturn
Show me another financial vehicle that gets so much direct and indirect government support yet still gets to call itself an investment not a welfare scheme.
Motels providing emergency housing.
Exactly RS, well said!
Est 500 FHB's into negative equity...(arghhnzed) My thoughts are that if it is all going to tank big time apartments will be the first to crumble ..... Still plenty of room to move median 370k profit gives potential buyers leverage.... market confidence will be wanting though... the smart cookies will be aiming to grind the sellers into submission ...the smart cookies will have liquid assets...those relying on credit might find it a hardened environment with short term equity risk featuring more prominently, likely not a comfortable position to be in. Hard to see any quick upturn short term...more of the same for a while I suspect.
Heres where the haters will jump on me...Market has been well overvalued for sometime and folk have been banking on neighbourly gains that are currently experiencing pressure .Financial institutions are likely hopeful of keeping rates low enough to continue to attract newbies and counter creeping increased risk. In the past they have held court over the RB, my thoughts are they are losing their grip in a minor way and sooner or later will find themselves playing catch up. Wont be long before they realise the RB isnt changing tack. Lets keep in mind its not only buyers that can grind that 370k profit...its financiers as well...the drunken excess period is over ,sobriety is required....lol
Also the relevance of the profit is questionable. Sure if you’re an investor cashing up, and have held the property for a sustained period. You’d still get a profit out of it, but how many will choose to sell? The rest are OOs buying back into the same market where that profit pays for the next house and on it goes.
What we're seeing is land values tumbling as developers exit the market. In apartments you are paying for the building mostly, which still costs the same if not more to construct. Hence during the COVID boom of 2020-2021 most apartments didn't increase as much in value, so will be slower to fall in this market.
Gee 8 months and still nothing of significance. You're probably wishing the same for your share portfolio
Any sensible share investor who is in accumulation mode should wish for cheaper prices so they can accumulate more shares.
A common difference to property investors is share investors are usually operating without leverage so the risk of being wiped out does not exist (assuming some moderate diversity in the portfolio)
Nothing of significance? Both Auckland and Wellington down around 20%, and many regions will follow.
I wonder if 30% is 'nothing of significance'?
According to some here its about to be!
Goalpost = move.
Wow. So a faster decline than Ireland is just business as usual.
I love the poker faced denial in these threads, it's hilarious.
I think he’s totally right.
But a lot of talking heads with vested interests are talking down the chances of a hard landing. Liam Dann at the Herald is one of the worst offenders.
Sounds right. Summary is that both wages and inflation are both happily rising together (too much). Spending still too high. Thus inflation will be persistent. The way out is continued, ever larger ocr rises. And the longer it all goes on the greater the risk of a serious downturn.
Reading the comments here is depressing - you negative lot....!
Welcome to Markets - they all go and they go down.... it's called cycles and it's totally normal and healthy... get over it...! it's the market balancing itself and shaking out stupidity
I don't read too much negativity. Just a mixture of observing a major cost for many people falling (surely good news?) and denial that this is really occurring.
You are 100% right. Its the over use of leverage that's the problem. How much leverage is really in play one may ask. Response - look at the profits the banks are making - that's how much. And when the cost of that servicing increases by a factor of 3-4x then you have a real issue with leverage turning from a hot air balloon to a millstone. One that cant be removed.
Very going point made above. Shares are normally owned without leverage, which means you can loose it without the bank chasing you. Property is all leveraged to the wazoo, hence the problem.
i read these comments purely to gauge sentiment. i believe the bears are celebrating a bit early. sure we have had a bit of a pull back - but no blood on the streets yet.
right now its simply a bit of a scrotum squeeze, if they hike 50 bps tomorrow, then i reckon its a scrotum squeeze plus a soft gut punch. it will be 2023 before any real blood to speak of.
as we all know, these rate hikes work with a ~ 6 to 18 month lag due to people having fixed mortgages.
Agreed, as rates continue to climb the rollover of loans in the next 24 months will be were reality really arrives as you face a 3-4x payment increase. but a big chunk of loans were rolling before the end of 2022. These will have followed TA speculation workshop advise and fixed for one year for the lowest rate, banking on National reversing all of Labour's changes.
I think it will be all good unless your only option on your mortgage when it comes due starts with an "8", then the shit hits the fan. The can is still being kicked down the road, you have had plenty of time to refix a 3 to 5 year mortgage. You have not "Lost" money on your house unless you sell it and rent, its simply going to turn around and recover. All you need to do is buy the one house that you live in and hang onto it, pretty simple.
Interest commentors over the last years:
'Boom:40%+/- gains' - it's just paper gains, it means nothing unless you sell! If you do sell it's just buying in the same market!
'Correction/Crash: 5%-10% loss-' - it's all over, people have lost so much money. You're only intelligent if you didn't buy! OMG we're going back to 2016!
Two camps for sure.
The speculative debt to the moon houses never go down crowd, and the math doesn't make sense and we are printing debt at the expense of future taxpayers to bailout speculator and bank profit crowd.
Quite different indeed.
Do you have a property portfolio Nifty?
What relevance is that to my observation? You're super defensive I/O about any alternative views to yours, any reason for this..
Its huge relevance, it shows whether someone has bias or not. If you have no portfolio, then we can take your comments a lot more seriously, if your opinion does not track with affordability and incomes, not to mention fundamentals and past performance of real estate in different countries.
Otherwise its.........................
The way that the famous yarn is usually told, Joe Kennedy got out of the market before the 1929 crash because a shoe-shine boy was offering him stock tips, and that just didn't seem right.
I think these days everyone including the so called experts are shoe shine guys.
Yes jump on the property investor pages - they're all experts on financial risk matters, but their day job is mechanic, primary school teacher, nurse etc and they're happily telling others that its always a good time to buy another rental.
IO do you pose as a PI so you can report on them and mock them with non PI. You're welcome to your cheap laughs
yes and they are all speaking about a crash. does that mean its time buy?
"CoreLogic's latest Pain and Gain report shows that on average, New Zealand home owners resell their homes after seven or eight years."
Because most people buy their home and stay in it for decades, that means there is also a lot of people that are still buying just to flick on after only a year or so.
This is a silly pointless discussion and why a CGT is wrong. If you sell you need to buy, it doesn't matter if the market is up or down (assuming you have equity) as the next house will have done the same.
Is it too early to be making 2013 price offers on properties?
I think it is a real reflection of the level of lower quality housing stock around NZ. The prices for the cold, drafty undesirable homes was getting crazy. If I were in the market, I'd certainly be looking at new builds. There is a bunch going up near my place on the Shore https://universalhomes.co.nz/communities/northcote/. I think in the years ahead people will be looking at the quality of a home as a major buying point
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