Property owners cashing in on resale turnaround

Property owners are seeing substantial gains from reselling as the trend of declining profit stabilises, according to a new Cotality report.

Cotality NZ’s latest Pain and Gain Report showed 88.1% of residential properties resold for more than their original purchase price in the December quarter, up from 88.0% in the previous quarter.

The result marks an end to three consecutive quarterly declines for profit-making resales.

The national median resale gain in Q4 was $298,000, down from the late-2021 peak of $440,000 but still higher than anything seen before 2021.

Cotality NZ chief property economist Kelvin Davidson said the figures suggest the market has entered a trough, which is consistent with how wider property values nationally have performed in recent months.

“Resale performance is still soft compared with the boom years, but the data suggests the downward drift has slowed and flatlined, and conditions are broadly holding steady,” he said.

“Property values have flattened out in recent months, and that stability is now flowing through to resale data. This has been a gradual downwards drift in resale performance since early 2022 rather than a slump, and almost nine out of 10 sellers are still making a profit when they trade.”

Standalone houses continued to record a lower frequency of resale losses than apartments in Q4, according to the report.

Davidson said apartments remained more exposed to loss-making resales, but there was little evidence of widespread distressed or forced selling.

“Apartments tend to feel market downturns more acutely … the gap largely reflects long-run differences in performance rather than any sudden deterioration in demand for property types.”

Hold periods hit highest level on record

Property owners are holding on to their properties for the longest period since records began, with a median of 10.1 years.

“We haven’t seen a significant jump in the historical time ranges, but this hold period surpasses the previous high of 9.4 years, which was only set in the September quarter last year,” Davidson said.

“This highlights the weakness of property values that has persisted since late 2021, which may be prompting some owners to hold longer as they look to maximise their capital growth. In other cases, it may reflect a quieter market and sellers are having to wait longer for a sale.”

Davidson said lower mortgage rates are likely to provide some support to house price growth in 2026.

“Lower interest rates should help underpin demand, but any lift in prices is likely to be gradual rather than a sharp rebound.”

He said several more months of consistent sales activity would be needed before the downturn could be considered to be over.

“Conditions are improving at the margin, we’re seeing this in some of the main centres, and a stabilisation in value declines, but the data suggests we’re entering a period of stability rather than a boom.”