Buyers’ market? Property resale profits down

Property resale profits have dipped again as the housing market shifts in buyers’ favour.

CoreLogic’s latest Pain & Gain report shows the proportion of properties resold for more than the original purchase price fell slightly to 92.9 percent through the first quarter of 2024, compared to the previous quarter’s 93.5 percent, as affordability and high mortgage interest rates weighed on buyers’ activity.

The market increasingly favoured buyers with a rising number of listings, taking pricing power out of the hands of sellers.

CoreLogic chief property economist Kelvin Davidson said the drop in resale performance was consistent with wider market patterns.

“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,” he said.

“Anybody who’s owned for the typical seven to eight years will almost inevitably sell for a gross profit.”

However the gain did not always result in a cash windfall for sellers, unless they were owner-occupiers downsizing or investors selling out.

“Many owner-occupiers will simply be recycling the new equity into their next purchase,” he said.

Davidson said North Island homes realised the largest gains, though sales in the main centres were mixed.

“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.”

According to the news on Radio New Zealand

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