Download the Pain & Gain Q4 2024 report
New Zealand’s property market is showing early signs of a gentle turnaround, giving resellers a glimmer of renewed leverage after a prolonged downturn.
CoreLogic NZ’s latest Pain & Gain report for Q4 2024 shows the proportion of properties being resold for more than the original purchase price was 91.0%, up from 90.1% in Q3 2024.
However, that’s still low compared to the post-COVID boom when more than 99% of properties typically sold for a profit.
CoreLogic NZ 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, he said.
Regaining ground
Mr Davidson said while buyers still have the upper hand, 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.
“While the figure is still low compared to the peak in late 2021 of $440,000, it’ still larger than anything we saw 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,” he said.
Mr Davidson added that although these profits are still significant and losses small, it’s 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 out
In Q4 2024, sellers who resold for a gross profit held their properties for a median of 9 years, up from 8.6 years the previous quarter.
Mr 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,” he said.
Losses ease
Mr Davidson said resale performance across property types suggested a turning point, with incurred losses starting to ease.
“In the fourth quarter of the year apartment resales incurred a loss on 29.5% of deals, compared to 8.3% for standalone houses.”
“Although the apartment figure clearly remains high, it dropped from 31.8% in the third quarter of last year. Whereas the ‘pain’ percentage of houses fell from 9.1% in Q3,” he said.
Falling rates to boost confidence
Looking ahead, Mr Davidson expects that lower mortgage rates will push up house prices to some extent in 2025, 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,” he concluded.
CoreLogic New Zealand