There are "early signs of a gentle turnaround" in the property market, according to CoreLogic.
The latest CoreLogic NZ Pain & Gain report for Q4 2024 showed 91% of properties being resold for more than the original purchase price, up from 90.1% in Q3 2024.
Chief property economist Kelvin Davidson said the small rise suggests resale conditions are gradually improving, aligning with broader signs of a market turnaround.
“While profits are down from the peak, most property resellers continue to see gains.
“The latest increase in the frequency of resale profits supports other indicators that the market may have found a floor, largely due to recent mortgage rate falls.
“However, with property values still about 18% below their peak and the overhang of listings keeping buyers in a strong position, selling conditions remain subdued.”
Buyers still have the upper hand
Davidson said buyers currently still have the upper hand, but resellers may be regaining ground as profits grow.
“In Q4, the typical size of reseller gains ticked up to $289,500 from $279,000 in the third quarter of last year.”
He said while the figure is low compared to the peak in late 2021 of $440,000, it is still larger than anything prior to Q4 2020.
“On the flipside, the median resale loss was unchanged at $55,000 in Q4, remaining within the $50,000–$60,000 range seen over the past two years.”
Although the profits are still significant and losses are small, Davidson said it was important to acknowledge two extra factors.
“Hold period plays a key role, and even in a downturn, anybody who has owned property for several years will still tend to make a profit. For owner-occupiers it’s not necessarily a cash windfall either. Indeed, most equity will just need to be recycled back into the next purchase.”
Holding period up
According to CoreLogic, sellers who resold for a gross profit held their properties for a median of nine years in Q4 2024. This is up from 8.6 years in the previous quarter.
Davidson said this could reflect caution amid softer market conditions, with many choosing to wait for more favourable opportunities.
“In some cases, particularly for investors, a target return strategy has meant holding properties longer due to the slower housing market over the past 2-3 years.
“However, it may also reflect weaker housing sentiment and greater caution, with owners opting to ride out the current soft patch before testing the market.”
Losses ease for apartments and houses
In the fourth quarter of the year, apartment sales incurred a loss on 29.5% of deals. This compares to 8.3% for standalone houses.
Davidson said while the apartment figure “clearly remains high”, it dropped from 31.8% in the third quarter of last year. Losses for houses also dropped from 9.1% in Q3.
Looking ahead
Davidson expected lower mortgage rates will push up house prices to some extent this year – which will tend to strengthen the position for property resellers.
“But any turning point for house prices won’t be sudden or strong, and lingering weakness in the labour market alongside an abundance of listings should mean finance-approved buyers continue to see good opportunities.”
SHARE ME