The $1.5b windfall
A strong market boosted homeowners’ bank accounts by $1.5 billion in just three months last year.
New Zealand’s strong property market boosted homeowners’ bank accounts by $1.5 billion in just three months last year.
CoreLogic has released its latest Pain and Gain report, for the December quarter of last year.
It shows how much people made or lost when they sold their properties.
In the three months to the end of 2017, 96 per cent of properties were sold for a price that was higher than the owners paid for them. Just over 90 per cent of apartments and more than 96 per cent of houses made a gain for their owners.
Christchurch had the highest proportion of loss-making sales, at 9 per cent. Property prices have been flat in the city for some time.
The median profit made nationally was $170,000. Properties that made a gain were held for a median 8.1 years each, so those homes made about $21,000 a year for their owners over the time they owned them.
Overall, there were $1.5b in gains, down from $3.4b in the previous three months, when more properties changed hands.
Auckland sellers made the largest gains, at a median $370,000 per sale. They were followed by Tauranga, at $227,500 and Hamilton at $206,500. Wellington had a median gain of just over $200,000.
Properties sold at a loss had been held for a median 4.2 years.
‘‘As was the case in the previous quarter, this has probably been driven by what we call ‘market fatigue’,’’ CoreLogic said.
‘‘A general slowdown in property value growth may have made some people question their assumptions about the scope for further gains, and this uncertainty has prompted them to resell at a loss.’’
More investors made a loss than owner-occupiers.
Economist Gareth Kiernan, of Infometrics, said it was interesting to note that the total proportion of sales at a loss in the early part of last decade was larger than in the wake of the global financial crisis (GFC). During 2011-12, the number of houses sold for a loss neared 20 per cent.
‘‘I think this demonstrates that if there has been a substantial lift in house prices during the boom [as there was from 2003-07], that it reduces the probability of someone selling at a loss in future.’’
ASB chief economist Nick Tuffley expected prices around the country would converge to very weak growth near the rate of inflation.
‘‘In Auckland and Christchurch’s case, that is a resumption of some weak price growth after very modest price falls, on average,’’ Tuffley said.
‘‘On that basis the proportion of properties resold at a loss is likely to remain low: flat to slightly up from the recent trend.
‘‘Weak capital gains will mean an equity buffer will be much slower to build up . . .
‘‘But the next few years is also a period in which we expect that drivers of forced selling will remain low: unemployment is likely to reduce further, and interest rates are likely to stay quite low over the next year.’’