15 Nov 2023

House resale performance should improve but it might take time - property economist

1:49 pm on 15 November 2023
Christchurch based housing

Photo: RNZ / Nate McKinnon

Nine out of 10 residential properties are still selling for a profit, despite the recent downturn in the housing market.

The latest CoreLogic NZ Pain & Gain report indicates a turnaround in wider housing market conditions helped stabilise the price of resale properties in the third quarter ended September, after dropping nearly seven percentage points in less than two years.

CoreLogic chief property economist Kelvin Davidson said most parts of the country were seeing strong, but slightly fading, property resale performance patterns, across all property and owner types.

He said the large majority of property resellers got a price higher than what they originally paid in the third quarter, as most of them had owned their property for several years.

"The wider property market has now found a floor and this helps to explain why the 'pain' proportion stayed relatively unchanged over the past quarter. In other words, the worst may have already passed for property resellers," Davidson said.

He expected the slow rise for wider property values over the next six to 12 months should see resale performance improve, though it might take some time.

"For most property owners who have held for a 'typical' period of seven to eight years, resale profits are still likely, regardless of what is happening in the wider market over shorter periods," Davidson said.

"It's also important to note any resale gains for owner-occupiers aren't necessarily cash windfalls. Instead, that equity just needs to be recycled straight back into the next purchase, unless they're downsizing or moving to a cheaper location."