The resale performance of residential real estate has deteriorated slightly through the first quarter of 2024, as stretched affordability and high mortgage rates weigh on activity, and rising listings push pricing power into the hands of buyers.

CoreLogic’s latest Pain & Gain report shows the proportion of properties resold for more than the original purchase price in Q1 2024 was 92.9 per cent, down from 93.5 per cent in Q4 2023.

The median gain also slimmed down to $302,500 from $315,000, while the median resale loss was $50,000, up from Q4’s $46,000.

Chief Property Economist Kelvin Davidson says the small softening in resale performance is consistent with wider market patterns.

“We’ve seen flattening property values since the end of 2023, as a result of stretched affordability (and low gross yields), high mortgage rates, and the rise in available listings on the market. These factors are all working together to swing the market back around for buyers.

“However the share of properties being resold for a gain is still reasonably high at more than nine in 10, and resale profits have been hovering around the $300,000 mark since Q2 last year.

“Of course, hold period plays a key role here. Anybody who’s owned for the typical seven to eight years will almost inevitably sell for a gross profit. It’s also important to point out, though, that this isn’t always a cash windfall. Many owner-occupiers will simply be recycling the new equity into their next purchase,” he said.

North Island home to largest gains

Kelvin describes the first quarter main centre figures as a mixed bag, with some experiencing a fall in the share of loss-making resales, and others a rise.

Tauranga ($417,000), Wellington ($405,000) and Auckland ($388,000) had the largest gains of the main centres in Q1 2024, whereas Hamilton, Christchurch, and Dunedin, all delivered resale profits in the $275,000-$300,000 range.

On the flipside, resale property pain was highest in Auckland at 10.5 per cent of resales made below the original purchase price in Q1 2024, which was up from 9.2 per cent in Q4 2023.

Softening results were also seen across Hamilton (9.4 per cent from 6.7 per cent) Wellington (7.3 per cent from 6.3 per cent) and Christchurch (4.4 per cent from 3.4 per cent) compared to the final quarter of 2023.

By contrast, Tauranga (6.0 per cent from 6.5 per cent) and Dunedin (5.9 per cent from 6.8 per cent) saw resale performance improve quarter-on-quarter.

Median hold period at new record

In Q1 2024, the median hold period on profitable resales increased to 8.8 years, which slightly surpassed the previous record of 8.6 in Q4 2023.

“In a softer market, it’s no major surprise that people need to hold longer for those gains to accumulate,” says Kelvin.

Exceeding the national Q1 2024 figure, Wellington had the longest hold period among the main centres for resale gains at 10.9 years.

Dunedin, Christchurch, and Auckland followed, all with a median of 9.3 years, with Tauranga (9.2) and Hamilton (8.3) behind.

The loss-makers in Q1 2024 were only owned for a median of 2.4 years nationally, with similar results across the main centres, although Auckland and Wellington were a little higher.

Less positive outlook for sellers

Kelvin says the property resale performance seen in a number of regions, as well as across property and owner types, has been reasonably stable.

“Looking ahead, we expect an underwhelming upturn for sales volumes and house prices in 2024, as unaffordability pressures continue to play a role and mortgage rates generally stay high.

“In that environment, and with available listings on the market quite high, the outlook is arguably better news for buyers, but less positive for sellers.”