Property sellers losing money at rate not seen in 14 years, property data firm says

More sellers lost money on their homes in the last quarter than at any time in the past 14 years, property data firm Cotality says.

It has released its latest Pain and Gain report, which shows 15.8 percent of the properties sold in the quarter went for less than the sellers had paid for them.

That was the highest proportion sold for a loss since the third quarter of 2021.

"Put another way, these are the toughest conditions for property resellers that we've seen for 14 years. Of course, this doesn't really come as a great surprise. After all, values are down significantly from the peak, there's an abundance of listings on the market, which is favouring buyers, economic conditions remain uncertain, and of course there's been an upwards drift for mortgage rates too," said chief property economist Kelvin Davidson.

"It's not a great time to be a seller, for sure. It hasn't really been a great time to be a seller for a while now."

He said it was not a sign of a new fall in prices, but a reflection of what had already happened.

"We know values are down across most parts of the country, and so just naturally, as time passes, more people have to sell, and you'll just see a higher proportion of people crystallising those losses, reflecting the falls in values we've seen.

"I don't think there's any cause to panic in here. It's just a reaction to market conditions."

In Auckland, 25.5 percent of properties sold for a loss, in Wellington it was 20.4 percent and Nelson 20 percent. Christchurch only recorded 7.5 percent making a loss and Dunedin 6.9 percent. Queenstown was 5.5 percent.

The median profit made by people who made a gain was $270,000, down from a peak of $440,000 in the fourth quarter of 2021, but higher than anything before the end of 2020.

Those who lost money lost a median $60,000.

About half of apartments were sold for a loss, 22.5 percent of townhouses and 13.4 percent of standalone houses. Davidson said properties with smaller plots of land tended not to experience as much capital gain over time so they were always more vulnerable to a loss.

Davidson said the number of apartments being sold for a loss had dropped slightly but the proportion had increased because overall sales were lower.

"People potentially focus on the high number for apartments, the high number for townhouses, but I think even within that, these are relatively broad brush numbers. Keep in mind that there's townhouses and then there's townhouses … perhaps townhouses that are the same as the next one, perhaps with limited access, perhaps narrow without parking, these sorts of things, in a so-called lower quality location, they may well be more likely to take a loss.

"If you are looking at a townhouse that's well-located, two-storey, good access, good quality, that may well be still getting a good price, might not take a loss at all. It's important to point out those differences."

Davidson said what mattered was how long people owned their properties for. Those that were sold for a profit had been owned for a median 10.4 years while those that were sold for a loss had only been held for a median 4.5 years. In Auckland, people who made money had owned their property for a median 11.9 years and in Wellington it was a median 15.2. Dunedin was 11.4.

"It's not a great time to be a seller. On the flip side, great time to be a buyer. So, it's always two sides in the market," Davidson said.

"And again, it's not as if the scale of losses is really getting any bigger or a big danger to the financial system but just that as people sell, the frequency of those losses is getting a little bit more common."

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