Losses from property resales are at a seven-year high amid a challenging housing market across the country, according to the latest report from CoreLogic.
The Q1 Pain & Gain report found around 6.1% of property resales in the first quarter of 2023 made a gross loss, up from 4.0% in the fourth quarter of last year.
The median resale loss was -$60,000, up from -$45,000 at the end of last year.
The median profit on the 93.9% of resales that sold for a gain remains high at $305,000, however the figure is down from the peak of $440,000 in Q4 2021.
The hold period for loss-making resales was 1.8 years, up slightly from 1.6 years in Q4 2022. It means the recent loss-making properties tended to have originally been purchased around the first half of 2021, when the market was strong.
Both owner-occupiers (5.8%) and investors (7.4%) saw an increase in loss-making resales this quarter.
While all of the main centres saw losses this quarter, Auckland had the highest proportion of loss-making resales at 13.2% this quarter, CoreLogic said. The figure is up from 6.9% in Q4 last year – the largest change of any of the main centres.
It was followed by Hamilton, with 8.1% of resales this quarter making a gross loss, and Wellington at 6.3%. Dunedin and Tauranga, meanwhile, sat in the 5.3% and 5.0%, respectively.
The losses were the lowest in Christchurch at 2.7% – up from less than 1.7% in Q4 last year.
While it remains relatively uncommon for houses to make a gross loss, it has now risen to 5.1% – the highest it has been since mid-2016.
Apartments also fared poorly, with 28% of apartment resales making a gross loss – the highest in over a decade.
CoreLogic warns house prices are likely to remain lower than previous peaks for several years, which may impact resales.
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