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The gain outweighs the pain in property sales nationwide

By Craig Catley

Amid frenzied media reports about Auckland becoming a buyer's market comes some good news for those looking to sell from CoreLogic's quarterly Pain and Gain report. According to the report, more homeowners are selling at a profit this quarter compared to their previous sale price, and fewer are reselling at a gross loss.

The report details what this outlook looks like nationwide, as well as in specific regions and centres including the North Shore. It also highlights how investors and occupiers are affected differently.

A positive outlook for North Shore property sales this quarter

Over the March 2017 quarter, a total $3.8b profit was recorded from resells, $1.6b of which was from Auckland sales, according to CoreLogic. For individual sellers, this meant an average gain $167,000 per sale.

A staggering 96.3% of homes resold at a gross profit – which means just 3.7% of homes resold at a gross loss, down from 4.2% in the last quarter of 2016.

Auckland has seen a very low proportion of loss-making sales since 2014.

In Auckland, the outlook was even more confident, with only 98.7% of homes selling at a profit, meaning only 1.3% of sales were sold at a loss.

According to the report, "Auckland has seen a very low proportion of loss-making sales since 2014," compared to other regions across the North and South Island. Areas like Hamilton have also enjoyed steady growth – but not for as long as sellers in New Zealand's real estate 'super city' have.

This is particularly affirming for those looking to sell in well established, well maintained areas such as Auckland's North Shore. Property in suburbs such as Takapuna, Castor Bay, Northcote and Belmont all sell at a median price above Auckland's $1 million average, according to QV indices. 

Investors and occupiers: who felt pain or gain?

Although property gains seemed to outweigh the pain this quarter, investors did experience more loss-making sales than owner occupiers.

In Auckland, only 1.1% of owner-occupiers resold at a loss, whereas 1.3% of investors experienced a loss. This is still indicative of a very confident resale market, especially when compared to other regions where differences were much greater:

  • Wellington – 0.5% of owner-occupiers experienced loss, compared to 3.4% of investors
  • Christchurch – 4.2% of owner-occupiers experienced loss, compared to 12% of investors
  • Rest of South Island – 4.4% of owner-occupiers experienced loss, compared to 7.9% of investors

The median loss felt was also more substantial for investors than it was for owner occupiers. While investors who sold at a loss experienced a median hit of $35,000, owner-occupiers only found themselves out an average of $24,865.

Over 96% of #nzproperty owners profited from resales in NZ in Q1. Download our Pain & Gain Report for more | https://t.co/kwF6q7kTSopic.twitter.com/xSK9LM4p2f

— CoreLogic NZ (@CoreLogicNZ) July 12, 2017

Why can reselling be less advantageous for investors? In large part because of the loans involved. Historically, investors have had access to risky loans including interest only loans that owner occupiers would be unlikely to take out. Although these loans can still be beneficial to investors looking to sell, they also don't perform well in downturns, meaning investors might take a hit by selling at the wrong time. Best to get in touch with our in-house LoanMarket experts to avoid any risky ventures for your home loan in the future.

For owner-occupiers, the message is loud and clear: there are still major profits to be made by selling your home, particularly in stable markets like Auckland and surrounding areas in the North Island.

Whether you're an investor or are trying to sell your family home, the best way to ensure a profit is to work with a knowledgeable agent who can help you every step of the way. At Ray White Takapuna, our team is dedicated to helping you get the best possible price for your home.

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