The percentage of residential property sales made at a loss hit a 12-year high in the third quarter (Q3) of this year, according to property data company Cotality's latest Pain and Gain Report.
Cotality found 12.2% of resales in Q3, excluding new properties being sold for the first time, were sold for less than their previous purchase price, leaving their vendors with a loss.
That's up from a peak of just 0.7% of loss making resales at the height of the last property boom in the fourth quarter (Q4) of 2021, and means loss making sales are running at their highest levels since the second quarter (Q2) of 2013.
Conversely of course, 87.8% of resales in Q3 this year were made at a profit for their vendors, although that was the lowest level of sales making a capital gain in the last 12 years.
Loss making resales were greatest in the Auckland Region, where nearly one-in-five (19.3%) of resales were made at a loss in Q3 this year.
Around the other main centres, the percentage of resales making a loss in Hamilton was 15.5%, Tauranga 10.8%, Wellington 15.8%, Christchurch 5.5% and Dunedin 10.0%.
Across the entire country, the median loss on properties that sold for less than their previous purchase price was $50,000, while the median capital gain on those that sold for a profit was $270,000.
In Auckland the median loss was $75,000, and the median gain was $338,000.
The differences in the size of capital losses and gains was also reflected in the length of time properties had been owned for before they were sold.
The median length of ownership for properties sold at a loss was 3.7 years, while the median length of ownership for properties sold at a profit was 9.5 years.
It should be remembered that selling expenses such as agency commissions and legal fees would have increased the size of the losses and reduced the size of the gains on most sales. These can have have a significant impact on the total loss or profit made by the vendor when a property is sold.
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