Auckland property price loss rate highest in a decade, Corelogic reports

The “Pain and Gain” report shows more than 16% of people who sold an existing Auckland residential property in the third quarter of 2024 did so at a loss. Photo / Fiona Goodall

By Susan Edmunds of RNZ

It could be a seven-year wait for people who bought a house at the peak of the market to not face a loss when they sell, CoreLogic says.

Its latest “Pain and Gain” report shows 9.8% of people who sold an existing residential property in the third quarter of 2024 did so at a loss.

In Auckland, it was more than 16%.

That is up from 8.2% the previous quarter. It is the highest number in about a decade but still well down on the peaks of the post-global financial crisis period.

The median loss being made was $55,000 while those who made a gain made a median $269,000.

Across the country, properties that had sold for a loss had been held for almost three years, while Auckland’s median hold period was 3.3 years.

Properties sold for a profit had been held for a median 8.5 years.

CoreLogic chief property economist Kelvin Davidson said the market had shifted in favour of buyers, which gave them more leverage in price negotiation.

“This follows a prolonged decline since the extended peak in 2021, when 99% of resales were profitable,” he said.

“Given the recent weakness in the wider housing market, it’s not surprising that both the frequency of profitable resales and the size of the gains have decreased.”

Davidson said the longer hold periods for profitable sales reflected many sellers being more cautious.

“Hold period is key. Even with the softer market conditions of the past 18 months, property owners who have held their properties for eight to nine years are still likely to make a gross profit,” he said.

The trend was likely to continue for the next couple of quarters, Davidson said.

“There are a lot of listings – they will take a while to work out of the system… there are some significant challenges for the property market still.

“I don’t think it will get dramatically worse but we might not see resellers gain a position of strength for a few quarters yet.”

He said it was normal that shorter hold periods correlated with a higher chance of making a loss and that had been amplified in the past few years because prices were down about 20% from the peak in some places.

“I don’t think people go in with the intention of buying and selling in a short period but things change.”

Davidson said it was fair to assume house price growth might be 4% a year over the coming years, rather than the 6% that was more normal in the past.

“After the GFC it took five years to get from peak to trough and back to the previous peak so six or seven this time is not totally unprecedented.

“It [might be] 2027, 2028 before we get back to the 2021 peak, It’s a bit of a slow grind.”

The proportion of investors selling for a loss climbed to 11.1% in Q3, up from 8.5% in Q2 and the highest level in a decade. In comparison, owner-occupier loss-making resales rose to 8.8%, highlighting a slightly widening gap between the two groups.

“Investors appear to be feeling the pinch a little more acutely, likely driven by cashflow challenges and possibly a reduced appetite to sustain loss-making properties,” Davidson said.

“While we’re not seeing a widespread exit from the market, the rise in investor losses suggests cashflow may be an issue for multiple property owners and some may be opting to cut their losses rather than continue to subsidise underperforming assets, particularly with still elevated mortgage rates.”

The performance gap between apartments and standalone houses remained high in Q3, with 35% of apartment resales incurring a loss, compared to 8.9% of houses.

“Investors typically favour apartments for their yield potential, but these properties can also be more susceptible to market fluctuations,” he said.

“While losses are more common in apartment resales, there’s no sign of fire-sale pricing. Instead, many investors appear to be reassessing their portfolios and, in some cases, choosing to absorb losses to focus on better-performing assets.”

Auckland had the highest proportion of loss-making sales among the main centres, at 16.1%, up from 12.9% in the second quarter. Wellington also had a lift, to 9.9%.