PHOTO: Wellington, New Zealand. FILE
In the past five years, house sellers in 48 suburbs across New Zealand have consistently experienced profitable sales, with no losses reported. These resilient locations include both prestigious areas favored by wealthy individuals and more affordable neighborhoods suitable for first-time home buyers. While the Wellington Region boasted the highest number of no-loss suburbs, notable areas for resale gains also include Dunedin, Rotorua, and Whangarei. Among these suburbs, the Greater Auckland beach town of Omaha stood out, as sellers there enjoyed the country’s highest median resale profit.
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According to a report by property listings platform OneRoof.co.nz, every seller in these identified suburbs has made a profit, with some averaging well over $2 million. The research, conducted in partnership with data provider Valocity, analyzed settled residential resales from 2018 to Q1 2023, categorizing them as profitable or resulting in a loss. Throughout this five-year period, only 6 percent of resales nationwide were sold below their initial purchase price, indicating that the majority of sellers still achieved a gross profit despite challenging market conditions.
Owen Vaughan, editor of OneRoof.co.nz, suggests that these suburbs provide a sense of security for homeowners due to their consistently favorable market conditions. The study presents a comprehensive view of seller profits and losses during a tumultuous period for the housing market, capturing the pre-COVID catch-up in regional markets, the surge in profits following the pandemic’s initial impact, and the subsequent downturn. Despite the challenging market, many sellers are currently reaping significant gains.
During the first three months of 2023, the nationwide median resale profit reached $300,000, nearly double the amount recorded in 2018. OneRoof Chief Greg Hornblow predicts a more favorable environment for sellers in the second half of 2023, as market conditions improve and auction clearance rates rise. However, he cautions that while a revival in prices is expected, it will not reach the level of a boom.
It is important to note that the reported profit and loss figures are based solely on paper transactions and do not consider property maintenance or upgrade costs, or outstanding mortgage balances. Profit is defined as selling a property above the previous purchase price, while a loss occurs when selling below the initial purchase price.
Out of the 304,079 resales analyzed, 97 percent (296,496) resulted in a profit. Total resale gains amounted to $102.9 billion, while losses totaled $534 million. Among the 48 suburbs with no recorded losses, the beach town of Omaha stood out, consistently generating the highest profits each year. In 2022 and Q1 2023, the median sale profit in Omaha increased from $446,500 to $2.21 million and $2.57 million, respectively. In 2022 alone, the 20 settled resales in Omaha collectively yielded profits exceeding $50 million, nearly quadrupling the total profits of 2018.
Furthermore, the study highlighted notable transactions, such as a Whitford mansion that achieved the largest on-paper profit of $11.3 million in Q1 2023. This mansion sold for $20 million at the beginning of the year. The largest overall profit from 2018 to 2022 amounted to $18.25 million, realized through the sale of a luxury home in Herne Bay for $23.5 million in 2020. Conversely, the largest loss in Q1 2023 was $1.5 million for a penthouse apartment in Mission Bay, while the biggest overall loss from 2018 to 2023 was $7.2 million for the former Parnell mansion of Sir John Key, which sold for $16.3 million in 2022.
SOURCE: ONEROOF
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