Photo: RNZ
The shadow of 2021’s house price boom still hangs over sellers trying to shift their houses, even years later.
New data from Cotality shows that 12 percent of people selling residential properties in the last quarter of last year did so for less than the amount they paid for them.
In Auckland, that stretched to 17.4 percent. Wellington was just over 15 percent.
Those who lost money had held their homes for a median 3.9 years, taking their purchase price back to the 2021 peak.
“It was a tricky time to have been a buyer and any unforeseen change in circumstances over the following period may have meant needing to sell at a reduced price,” Cotality chief property economist Kelvin Davidson said.
People who made money had held their properties for a median 10.1 years, the longest ever recorded in the data, which goes back to the 1990s.
Those who lost money lost a median $55,000 compared to a median $298,000 for those who made a gain. Auckland sellers lost a median $78,944 and gained a median $367,250.
Davidson said the data probably showed that people were holding on longer before selling to try to allow gains to accumulate.
“Or in other cases it may just reflect the fact that in a relatively quiet market a lot of sellers simply have to wait longer for a deal to be achieved.
“Indeed, some property owners may also just be choosing to hold for a bit longer if they’re uncertain about their job prospects or don’t want to pay transactions costs such as an estate agent’s commission or conveyancing fees as regularly. In addition, lending restraints such as the loan to value ratio rules may have kept more people where they are for longer.”
He said there had been periods in the past where places had been held longer and still made a loss. In 2016, the median hold period for places making a loss was eight years.
Investors have historically been more likely to sell fort a loss than owner-occupiers but this quarter’s data showed little difference.
Investors were making a median loss of $58,950 and a median profit of $308,000 compared to $56,500 for owner-occupiers who lost money and $285,350 for those who made a gain.
Hamilton investors made more losses than owner-occupiers – at 20.6 percent of sales compared to 13.2 percent for owner occupiers.
But in Wellington the trend was reversed, with 17 percent of owner-occupiers making a loss and only 11 percent of investors.
Davidson said the data showed the general flatness of the market.
“A bit more balance out there now. Deals are being done, so buyers and sellers are meeting in the middle and maybe vendors aren’t necessarily getting the price they might have liked two years ago, but they have adjusted expectations and they’re happy with it now.
“The market’s clearing, deals are being done and okay, there’s a bit more pain out there for sellers than there has been in the past. But there are signs of a stabilisation, and we actually saw the median resale gain go up a bit in the fourth quarter, too.”
He said even if people were not able to sell for the sort of price they might have at the market peak, if they had owned their houses for 10 years or more, they were likely to get more than they paid.
“The gains are smaller than what they were, but still pretty significant. Even at 88 percent, that’s still most people making a resale gain when they sell.”
He said it was likely that those who bought in the 2021 peak would struggle to sell for a few years yet.
“We’re still down 18 percent from the peak nationally, some areas more than that … that’s taken four years.
“Let’s say growth from here on is even ambitiously maybe sort of 5 percent on average over the next three, four, five years, it’s going to take at least four years to get back to that previous peak. So, this sort of tough period to buy and sell relatively quickly could be around for two or three years yet.”
He said most people would not have bought with the intention of selling soon.
Davidson said he expected house price growth to resume later in the year as the economy improved and mortgage rates remained relatively low. “Property resellers may fare better in that environment but it’s unlikely to be a boom.”
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