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Auckland property gains halved in two years

A growing number of investors are seeing the sale of their properties result in a loss rather than a profit as the property market slows.

Thursday, January 25th 2018, 9:16AM

CoreLogic’s latest Pain and Gain report shows that the number of resales resulting in a gross loss in the third quarter of 2017 rose to 4.3%.

Nationwide, total gains declined by nearly $900 million.

In Auckland, total profits from gain-making property resales came in at $1.56 billion, which was half of the peak value of $3.0 billion in the third quarter of 2015.

CoreLogic head of research Nick Goodall says that capital gains have slowed and, in some cases, moved into negative territory.

“This may be a sign of market fatigue with buyers choosing to cash out of the market rather than risk holding the property and potentially experiencing further loss.”

Apartments are faring worse than houses in the resale stakes, with 10.1% of apartments being sold at a loss as compared to 4.0% of houses.

That equates to a median loss of $25,000 for apartments as compared to $18,000 for houses.

Both Auckland and Christchurch are seeing an upwards trend for resales at a loss for both investors and owner occupiers.

But it is investors who are faring worse, with 4.1% in Auckland and 15.2% in Christchurch experiencing loss making resales.

Goodall says the lift in the investor proportion bucks the trend of the last few years.

“Investors are under increased scrutiny from the new government with the quality of rental properties needing to improve and to be managed by future regulation by the recently passed Healthy Homes Guarantee Act.

“This may cause more investors to sell out of the market to avoid bearing the costs of improvement or to raise funds for other rental properties.”

Looking at markets around the country, Christchurch saw the highest proportion of loss-making resales: up to 11.1% from 8.1% in the previous quarter.

It was followed by Tauranga (3.9%) and Auckland (3.3%), which equated to a slight increase for both as compared to the previous quarter.

Hamilton and Wellington’s share of loss-making sales remains flat, at around 1.5%.

The story was very different for Queenstown which, for the second quarter in a row, had no resales at a loss.

Goodall says this reflects the strength of the market there.

However, nationally resale gains ($3.4 billion) continued to dominate resale losses ($30 million) over the third quarter.

Tags: CoreLogic investment property investment

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Lender Flt 1yr 2yr 3yr
ANZ 5.79 4.65 4.85 4.99
ANZ Special - 4.15 4.35 4.49
ASB Bank 5.80 4.59 4.69 4.79
ASB Bank Special - 4.19 4.29 4.39
BNZ - Mortgage One 6.50 - - -
BNZ - Rapid Repay 5.95 - - -
BNZ - Special - 4.19 4.29 4.49
BNZ - Std, FlyBuys 5.90 4.69 4.79 4.99
BNZ - TotalMoney 5.90 - - -
Credit Union Auckland 6.70 - - -
Credit Union Baywide 6.15 5.20 5.25 -
Lender Flt 1yr 2yr 3yr
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.90 4.95 -
Housing NZ Corp 5.80 4.69 4.79 4.79
HSBC Premier 5.89 3.99 4.19 4.69
HSBC Premier LVR > 80% - 3.85 - -
HSBC Special - - - -
Lender Flt 1yr 2yr 3yr
ICBC 5.80 4.59 4.69 5.09
Kiwibank 5.80 4.69 4.69 4.99
Kiwibank - Capped - - - -
Kiwibank - Offset 5.80 - - -
Kiwibank Special - 4.19 4.19 4.49
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 6.10 5.10 5.45 -
Resimac 5.30 4.86 4.94 5.30
RESIMAC Special - - - -
SBS Bank 5.89 4.85 5.05 4.49
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 4.19 ▼3.95 4.49
Sovereign 5.90 4.59 4.69 4.79
Sovereign Special - 4.19 4.29 4.39
The Co-operative Bank - Owner Occ 5.75 4.19 ▼4.35 4.49
The Co-operative Bank - Standard 5.75 4.69 ▼4.85 4.99
TSB Bank 5.80 4.69 4.69 4.99
TSB Special - 4.19 4.19 4.49
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.95 4.69 4.79 5.19
Westpac - Offset 5.95 - - -
Westpac Special - 4.19 4.29 4.49
Median 5.89 4.62 4.69 4.79

Last updated: 19 October 2018 6:18pm

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