NZ house sales: Which cities saw the most gain and most pain?

Nearly 96 percent of all New Zealand properties sold between July 1 and September 30 this year enjoyed a resale gross profit, new figures show.

The total resale gain for the quarter was $3 billion and the median gain was $180,000 per property, according to CoreLogic NZ's newly released Pain and Gain report.

By comparison, just 4.2 percent of all properties resold at a loss over the same period, a very minor rise from 4.0 percent in the previous quarter.

The total resale loss for the period hit $29.9 million, and the median loss was $20,000 per property.

CoreLogic NZ head of research Nick Goodall said: "Equity from resale gains 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."

The Pain and Gain report 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.

Mr Goodall said: “The degree of pain in New Zealand’s housing market has been hovering around very low levels of 4 percent 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."

The report found:

- The share of apartment resales made at a price above the original purchase price increased from 87.2 percent in the second quarter of 2018 to 90.1 percent in the third. For houses, the figure eased a little from 96.4 percent to 96.1 percent - but still very high.

- The share of both investors and owner occupiers experiencing gross profits remains high. More than 95 percent of investor resellers made a gross profit in the three months to September 30, while for owner-occupiers it was a touch higher at 96 percent.

- New Zealand’s home renovation passion showed good performance. Unsurprisingly, properties that have been renovated are less likely to have a selling price below the original purchase price. In the three months to September 30, just 0.4 percent 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 percent of property resales in quarter three 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 percent 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.

Mr Goodall said: “Although the gap between apartments and houses has come down in the past few quarters, it is still significant. This shows that any market fatigue is more of a factor in the apartment segment, perhaps where buyers’ approach is more financially-minded and they are prepared to exit as soon as the sums don’t add up anymore. Of course, we need to reiterate the long term context here.

"In previous cycles, the share of apartment resales being made at a gross loss has been far higher (e.g. peak of 45 percent in 2000 and 53 percent in 2008), so the current levels aren’t actually too bad."

Mr Goodall said that properties resold at a loss in the September quarter had been owned for a median period of three years. That was unchanged from the previous quarter’s figure, and these are the shortest hold periods for pain in about eight years.

"By contrast, properties that resold for a gross profit in the third quarter had been held for a median period of 7.5 years. Hold periods for profit-making resales have consistently been around 7.5-8.5 years since late 2010."

Median resale profits across the main centres ranged from $340,000 in Auckland down to $130,000 in Christchurch. Total profits in Auckland were the highest (which is no surprise given its size) at more than $1.2bn, with Wellington also seeing a solid total profit ($257m), and Christchurch, Tauranga and Hamilton also topping the $100m mark.

Median resale losses were in a much tighter band across the main centres, ranging from $17,500 in Wellington up to $28,500 in Tauranga. Auckland again saw the largest total losses ($10m), while Hamilton and Dunedin only saw total losses of $100,000 or less (spread across only five and four sales respectively).

In Whangarei, the median gain was $180,000 for total profits of $51.5m. Rotorua’s median gain was not far behind at $170,000 (total profits of $40.1m) in the third quarter, and Gisborne’s was a solid $96,500.

Resale gains in the Lower North Island were strong. Napier came out on top with a median profit of $176,000 for resales in Q3, with Hastings not far behind ($167,200). Whanganui was below the $100,000 mark, but a figure of $85,250 is still healthy. Total resale profits ranged from more than $40m in Hastings and New Plymouth down to about $24m in Whanganui.

In the South Island, the pain and gain data once again highlights the strength of Nelson and Queenstown. In these two centres, all resales in the third quarter were sold for a price higher than the original purchase price. In Queenstown, the median resale profit was $382,785, with Nelson also impressive at $175,000, and Invercargill $78,000.

Total profits across these three centres were $30m or above, actually topping $40m in Queenstown.