Profit slumps bring pain for some vendors
Even for sellers making gains, levels have shrunk back to those of 2019
Resale profits in Auckland slumped in the three months to the end of September, with the revival in the city’s housing market not enough to prevent crippling real estate pain for some.
While the vast majority of residential resales in Auckland in the third quarter achieved a gross profit, the size of the gain shrank back to levels last seen in 2019.
However, analysis by Oneroof and its data partner Valocity found the share of resales making a profit dropped to a 10-year low of 86 per cent — six percentage points lower than the same period last year and well below the 98 per cent peak seen in 2021.
The median profit for Auckland resales in the third quarter of 2023 tumbled 27 per cent year-on-year to $325,000 while the median loss jumped 45 per cent over the same period to $51,000, although this was smaller than the quarter before.
The nationwide median resale profit in Q3 2023 was $271,000, down 18 per cent ($62,000) on the same quarter last year, while the median loss grew from $28,5000 to just over $42,000 over the same period.
The research found that Christchurch sellers did best, with their median profit in the three months to the end of September down only 4.4 per cent ($11,875) year-on-year to $253,125. Tauranga sellers scored the
The sale of long-held family homes in South Auckland . . . will have kept resale profits in the district high.
highest median resale profit, which, while down 8.3 per cent year-on-year, was still a healthy $431,000.
Dunedin resale profits dropped
17.5 per cent ($53,000) year-on-year to $250,000, the lowest out of the major metros.
In Auckland, resale profits in Manukau shrank the least and were among the highest in the city, dropping just 8.3 per cent ($39,500) yearon-year to $401,000.
The sale of long-held family homes in South Auckland, still attractive to developers, investors and first-home buyers, will have kept resale profits in the district high, as would the sale of high-end family homes in East Auckland.
Some sellers in 2023 managed to score huge profits even against the backdrop of a downturn, although the biggest sums were all in Auckland and typically the result of long hold periods.
The research found the biggest gross profit so far this year was $11.3m for a Whitford mansion that sold for $20 million at the start of the year.
The vendor, a wealthy American entrepreneur who made his money in the motor industry, had paid $8.7m in
2011 for the Strathfield Lane property. He had used the five-bedroom mansion as a holiday home, bringing in his own designers to upgrade the 900sq m house and grounds.
The renovation, not surprisingly, included a 10-car garage as well as a pavilion for entertaining, a swimming pool, tennis court and man-made water features.
The property was listed with Ollie and Graham Wall, of Wall Real Estate, with the buyer brought to the deal by Bayleys agents Angela Rudling and Michael Chi, who had sold the house to the owner in 2011.
A Mediterranean-style mansion, known as Bramasole, on Lucerne Rd, in Remuera, made the second-highest resale profit when it fetched $12m in April, yielding a $10.3m gain over nearly 30 years. OneRoof-Valocity records show the owners paid $1.7m in 1995 for the 1869sq m site.
However, three years later consents were issued for the luxury 634sq m house, which was finished around 2000. It sports five bedrooms, landscaped terraces overlooking the water, a swimming pool, gym, spa and sauna.
It had been updated over subsequent years, and one of the agents involved in the April 2023 resale, Bayleys’ David Rainbow, said the new owners planned to give it a full-scale makeover.
Also riding high were two luxury clifftop homes: one on Harbour View Rd, in Point Chevalier, which netted a $6.95m gross profit after selling for $10.5m in July; the other a fivebedroom near-new pad on Seacliffe Avenue, in Belmont, which netted a $6.35m gross profit after selling for $8.25m in July.
Auckland properties dominated the list of loss-making properties as well, but the hold periods for these homes were a lot shorter, around the one to two-year mark.
The year’s biggest resale loss was $1.5m for a penthouse on Kepa Rd, in Mission Bay. The owner had, at the start of the year, declared to OneRoof his willingness to sell well below the original purchase price of $5m.
“We bought on the high and we are selling on the low and that’s life,” he said.
Two homes with development potential that had been picked in the post-Covid peak also suffered big losses. A villa on a 1034sq m site on Shelly Beach Rd, in St Marys Bay, sold for more than $1.3m below what it had been bought for in August 2021, while a 691sq m corner site on Patey St, in double grammar zone Epsom, incurred a paper loss of just over $1m.
That property on Patey St was surprisingly re-advertised as a mortgagee sale less than three months after its purchase in April. The listing agents, Ray White’s George Erdos and Howard Sidnam, told OneRoof that the planned auction in July did not go ahead as the mortgagor had settled with the mortgagee.