PHOTO: FILE
NZ House Sale Profits Plummet 41% as Losses More Than Double in 2024
The New Zealand property market in 2024 has been marked by a striking downturn, with house sale profits plummeting by a staggering 41% compared to previous years. New data paints a bleak picture of a market under pressure, revealing that the number of homeowners selling properties at a loss has more than doubled.
A Challenging Year for Property Sellers
According to a comprehensive report, the rapid decline in profit margins is unprecedented, with sellers now facing heightened challenges to secure gains on their properties. The once-lucrative property landscape, driven by soaring prices and competitive bidding, has given way to a more subdued and unpredictable market.
The economic headwinds, rising interest rates, and tightened lending criteria are key contributors to this dramatic shift. Sellers who previously benefited from significant capital gains are now seeing their margins eroded, and for many, the outcomes have turned negative.
Profitability Drops Across Major Regions
The fall in profits has been felt nationwide, but some regions have been hit harder than others. Auckland, traditionally a bellwether of the New Zealand property market, has experienced a pronounced dip in profitability. Other major centers, including Wellington, Christchurch, and Hamilton, have also reported similar trends, with a noticeable increase in properties sold at a loss.
Regional towns and cities, once seen as a refuge from the high prices of metropolitan areas, are not immune. Smaller markets that had witnessed rapid appreciation during the pandemic-era property boom are now experiencing corrections, leaving sellers grappling with diminished returns.
Doubling Losses: What Went Wrong?
The doubling of property losses in 2024 has raised concerns among analysts and policymakers alike. Among the contributing factors are:
- Rising Interest Rates: The Reserve Bank’s efforts to curb inflation through increased interest rates have made mortgages more expensive, leading to reduced demand and downward pressure on property prices.
- Economic Uncertainty: Global and domestic economic challenges, including inflationary pressures and reduced consumer confidence, have made buyers more cautious, slowing down the market.
- Tightened Lending Rules: Regulatory measures aimed at ensuring responsible lending have restricted access to credit, particularly for first-home buyers and investors.
- Market Corrections: Following years of exponential growth, the market is undergoing a natural correction, with prices adjusting to more sustainable levels.
The Biggest House Sale Profits Of 2024
The table shows the 10 homes that made the biggest gross profit on resale.
| Paritai Drive, Orakei, Auckland | $21,840,000 |
$11,340,000
|
14.3 |
|---|---|---|---|
| Lake View Road, Takapuna, Auckland | $10,000,000 |
$8,800,000
|
24.9 |
| Almorah Road, Epsom, Auckland | $7,675,000 |
$6,525,000
|
25.5 |
| Ridings Road, Remuera, Auckland | $9,300,000 |
$6,400,000
|
14.4 |
| The Strand, Onetangi, Auckland | $8,000,000 |
$6,050,000
|
14.6 |
| Ocean View Road, Oneroa, Auckland | $6,500,000 |
$6,032,500
|
29.3 |
| Brookfield Street, Saint Heliers, Auckland | $7,650,000 |
$6,000,000
|
15.1 |
| Delamore Drive, Oneroa, Auckland | $7,500,000 |
$5,500,000
|
12.6 |
| Franklin Road, Freemans Bay, Auckland | $6,000,000 |
$5,400,500
|
19.4 |
| Oceanbeach Road, Mount Maunganui, Tauranga | $5,600,000 |
$5,260,000
|
30.2 |
Long-Term Owners vs. Short-Term Investors
One of the most striking revelations from the report is the disparity in outcomes for long-term property owners versus recent investors. Homeowners who purchased properties several years ago, before the market’s peak, still manage to secure modest profits when selling.
In contrast, those who bought at or near the peak of the market, often paying inflated prices, are now bearing the brunt of the downturn. This is particularly evident in investor-dominated segments, where the pressure to offload underperforming assets has led to significant financial losses.
Policy Responses and Market Outlook
The situation has prompted calls for intervention and support to stabilize the market. Experts are urging policymakers to consider measures that promote affordability, encourage investment, and protect vulnerable homeowners.
While the current market conditions are challenging, some analysts remain cautiously optimistic about the long-term prospects. They point to factors such as population growth, infrastructure investments, and the eventual stabilization of interest rates as potential catalysts for recovery.
The year’s biggest resale loss was a development site on Tennyson Avenue, in Auckland’s Takapuna. it was bought in 2022 for $4.75m and resold in 2024 for $3.74m. Photo / Supplied
Advice for Buyers and Sellers
For those navigating the current market, expert advice is critical. Sellers are encouraged to adopt realistic pricing strategies and work closely with experienced agents to maximize their returns. Buyers, on the other hand, may find opportunities in a market that increasingly favors negotiation and careful due diligence.
A five-bedroom mansion on Ridge Road, in Mahurangi East, on Auckland’s northern fringes, resold for a gross loss of $800,000. Photo / Supplied
Conclusion
The property market in New Zealand is undergoing a significant shift, with house sale profits plummeting and losses escalating in 2024. While the immediate outlook may appear daunting, it represents a period of recalibration that could pave the way for more balanced and sustainable growth in the future.
For both buyers and sellers, staying informed and strategic will be key to navigating these challenging times and making the most of opportunities in an evolving market.
SOURCE: NZHERALD