The percentage of residential properties being sold at a loss continues rising

The percentage of residential property sales being made at a loss continues to grow, according to Cotality's latest Pain and Gain Report.

It found 9.2% of all residential sales in the first quarter (Q1) of this year sold for less than their previous purchase price, leaving their vendor-owners with a capital loss. (Cotality was formerly known as CoreLogic).

That's up from 8.9% in Q4 last year.

Around the country the areas with biggest percentages of loss making sales were MacKenzie District 15.8%, South Wairarapa 14.0% and Marlborough 13.6%. 

In the main centres the biggest percentage of loss making sales in Q1 was in Auckland 14.2%, followed by Wellington 10.9%, Hamilton 10.3%, Tauranga 9.4%, Dunedin 7.1% and Christchurch 4.6%.

The median loss across all loss-making sales was $50,000.

The pain accompanying that sort of loss will be even greater once selling expenses such as agent's fees and legal costs are added.

Apartments are by far the most likely type of property to sell at a loss, with a third of the apartment sales (32.8%) in Q1 making a loss, compared to 8.4% of houses.

The average loss on apartment sales was $63,000, compared to $49,000 for houses.

The main determinant of whether a property sells for a profit or a loss appears to be time.

The median length of ownership for the properties that sold for a profit in Q1 was 9.1 years, compared to 3.3 years for those that sold at a loss.

Cotality Chief Property Economist Kelvin Davidson said the Q1 figures told a story of resilience.

"Despite house prices still sitting about 16% below their early 2022 peak, most property owners are continuing to sell for a profit, especially those with longer ownership periods," he said.

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