New Zealanders selling their homes enjoyed $3.5bn in re-sale gains last quarter

This, from the latest CoreLogic Pain & Gain Report, an analysis of homes resold over the June Quarter (between 1 April 2018 and 30 June 2018). The report compares the most recent sale price to the home’s previous sale price, determining whether the property resold at a gross profit or gross loss. It provides a proxy for the performance of the housing market and highlights the magnitude of profit or loss the typical seller of a home makes in those regions analysed.

Just 3.9% of properties sold over the quarter suffered a loss (a slight rise from the previous quarter’s 3.8%), with total losses of $23.4m and a median loss per property of $20,000. These levels of pain remain very low in an historical context, consistent with the large rises in values seen over the past five years, as well as the fact that even though values have slowed recently, there haven’t been falls.

Senior Analyst, Kelvin Davidson notes: “These figures are consistent with the continued growth in property values across most parts of New Zealand (apart from stability in prices in Auckland and Christchurch) and indicate that relatively few people are pushing through a quick sale for a low price”.

Houses  Vs. Apartments: 
Apartment re-sales are holding steady, with 87.00% realising a gross profit in Q2, a good result historically, and consistent with the large rises in values seen over the past five years. Houses continue to outperform, with a gross profit result of 96.5%. The gap between apartments and houses remains larger than it has been for about three years, indicating that any market fatigue is more of a factor in the apartment segment, perhaps where owners’ approach is more financially-driven, so are prepared to exit as soon as the sums don’t add up.

The total gains on house resales in Q2 2018 were $3.2bn, with a median gross profit of $180,000. For apartments, resellers banked total gains of $74.7m, with a median of a touch less than $137,000. Median losses on apartments ($26,000) in Q2 were slightly higher than that for houses ($20,000), while total losses for the two segments were $2.1m and $18.4m respectively.

City vs region:
Main centres: 

Most of the main centres saw the share of property resales being made for a gross profit stay pretty high and stable in the second quarter, with a concentration between 96% (Auckland) up to the strongest performance of 99% in Wellington. Even despite some volatility in property values in the past few months, Wellington in particular is buoyant, with just 1.0% of resales in the second quarter being made below the original sale price. In Christchurch however, the proportion of profit-making resales fell from 91% in Q1 2018 to 88% in Q2 (or losses rose from 9% to 12%). This is not necessarily of huge concern though, given that ‘as is, where is’ sales are still going through and insurance payouts will be softening the blow to sellers’ pockets.

Davidson comments: “Overall, the message at the national level also applies around the main centres – although there are some small signs of weakness and market fatigue (as you would expect in a generally sluggish market), the property market is still generating strong profits for resellers, with gross losses at low levels”.

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