News & Research

Short term losses up in property market

08 October 2017

Short-term loss making property sales are rising around the country, suggesting that more owners are questioning future gains, according to our latest report.

The latest Pain and Gain report by CoreLogic reveals the median hold period for properties selling at a loss was 6.7 years, down from 8 years in the previous quarter.

 

Head of Research Nick Goodall says more people selling over a shorter period and taking a loss is the result of the general market slowdown, and uncertainty about the future.“The recent slowdown in value growth is an obvious factor. There’s also the potential for future costs to increase, including higher interest rates, or policies affecting investors.” 

“We know from consumer confidence surveys that house price expectations have weakened. This new data shows a higher number of people who bought in the past year are more cautious and choosing to sell earlier,” Goodall says. 

Nationwide, there was over $26 million in realised losses over the quarter, or almost $20,000 per sale.  Investors were hit harder than owner occupiers, losing around $44,500 per sale. In Auckland, the median hold period for loss making sales dropped to just one year during the June quarter, down from 2.3 years in the previous quarter. “This means half of all Auckland properties selling at a loss were owned for less than a year,” Goodall says.

The report shows Christchurch experienced the greatest proportion of loss making sales over the quarter, at 7.9%. Goodall says this is due to values plateauing from out-of-cycle growth following the Canterbury earthquakes. 

Despite the decrease in confidence among sellers, Goodall says he expects market growth to pick up again around the middle of 2018. “Interest rates are still very low, the flow of Kiwis returning home from abroad is an established trend, and new supply will continue to be constrained.”

“But right now, there’s clearly a degree of caution among sellers who aren’t prepared to wait for values to start increasing again,” Goodall says.  

Major Centres

Proportion of total resales at a loss and median loss per sale (June quarter)

Download the latest Pain and Gain report here.

Nick Goodall spoke to TVNZ Breakfast - click here to watch the interview and to find out what regions are doing well at the moment and where the losses are being felt. 

CoreLogic logo

Terms of use | Privacy| International Solutions
© 2014 CoreLogic NZ Limited. All rights reserved.

FacebookLinkedInTwitter