The Current State of Residential Property Sales
According to the latest Pain and Gain report from Cotality, formerly Corelogic, nearly one in 10 property sales are occurring at a price lower than what the sellers initially paid. This trend highlights a gradual shift in the housing market dynamics amid varying economic conditions.
Profit and Loss Dynamics
In the first quarter of this year, 90.8% of residential transactions resulted in a gross profit, a slight decrease from 91.1% in the previous quarter, and significantly down from the 99% peak during the boom period. For those sellers who experienced profitable sales, the median profit stood at $280,000, although this pales in comparison to the record $440,000 median profit in the last quarter of 2021.
Market Resilience and Time in the Market
Chief property economist Kelvin Davidson emphasized the market’s resilience, attributing success to how long a property has been owned. Properties resold for a profit within the first quarter of 2025 typically had been owned for 9.1 years, indicating the importance of a sustained holding period in shielding owners from market volatility.
Trends by Property Type and Location
Investor sales, particularly of apartments, showed higher losses than those of houses. While only 8.4% of houses were sold for less than the purchase price, the same figure for apartments was a steep 32.8%. The median loss on an apartment equaled $63,000, superior to the $49,000 median loss for houses.
Regional Variations
Auckland registered the highest proportion of sales at a loss, at 14.2%, followed by Wellington and Hamilton. However, Whangārei saw the most significant losses among smaller centers, with 16.2% of transactions ending in a loss. Conversely, Queenstown experienced a mere 1.1% loss rate.
Future Market Predictions
Although the downturn in prices may be stabilizing, Davidson indicated uncertainty about an abrupt market recovery. He predicts a moderate 5% price increase this year, potentially reducing resale losses and offering slight profits to sellers.
Strategies for Homeowners
For current homeowners and potential investors, longer-term ownership seems to be a prudent strategy to mitigate the risk of loss. Opting for real estate in markets with stable or rising property values, like Queenstown, could also prove advantageous.
FAQs
- Why are more properties selling at a loss now? Economic shifts, market conditions, and shorter holding periods contribute to this trend.
- Are apartments riskier investments? The data indicates higher frequency and magnitude of losses for apartments compared to houses.
- How can homeowners protect their investments? Holding properties for longer periods and staying informed about regional market trends can aid in reducing potential losses.
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