NZ homes achieve over $3B in re-sale gains last quarter

NZ’s latest Pain and Gain results are out, and once again we’ve seen large gross profits being made by resellers and minimal gross losses.

Almost 96% of all NZ properties sold during 1 July 2018 – 30 September 2018 enjoyed a re-sale gross profit, for a total resale gain of $3Billion – a median gain of a very tidy $180,000 per property. By comparison, just 4.2% of all properties resold at a loss over the same period, a very minor rise from 4.0% in the previous quarter 2018. Total resale losses for The September Quarter (Q3) were $29.9m (a median loss per property of $20,000).

Of course, any resale equity often needs to be recycled back into the next property purchase, so won’t necessarily be turned into a true cash gain, but overall, these figures add to the evidence that New Zealand’s property market remains on a solid foundation. The findings of this report 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 show that relatively few people want to push through a quick sale for a low price.

Essentially, we compared the most recent sale price to the home’s previous sale price, determining whether the property resold at a gross profit or gross loss. This acts as a quarterly 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.

The pain and gain data shows that the degree of pain (resale losses) in NZ’s housing market has been hovering at very low levels of 4% each quarter for about two years now. That’s consistent with continued property value growth in many parts of the country – especially the main regional cities and towns; and at worst flat markets in some of our larger centres (namely Auckland and Christchurch).

Report highlights include: 

  • By property type, the share of apartment resales made at a price above the original purchase price increased from 87.2% in the second quarter of 2018 to 90.1% in the third. For houses, the figure eased a little from 96.4% to 96.1% – but still very high.
  • By owner type, the share of both investors and owner occupiers experiencing gross profits remains high. More than 95% of investor resellers made a gross profit in Q3, while for owner occupiers it was a touch higher at 96%.
  • NZ’s home renovation passion showed good performance. Unsurprisingly, renovated properties are less likely to have a selling price below the original purchase price. In Q3, just 0.4% of resold properties made a gross loss having previously had a building consent issued against them. The properties with a consent attached also tend to be held longer before resale.
  • Across the main centres, Dunedin stands out at the top end of performance, with only 1.0% of property resales in Q3 made at a gross loss. For owner-occupiers in the city, there were no gross losses recorded in the third quarter. Christchurch’s figures remain weaker (13.4% of resales at a gross loss), but much of that can be explained by the distortion of ‘as is, where is’ sales. In reality, the loss from original purchase price to recent sale price is mitigated by insurance.

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