Owners Said Don’t Worry About Price Drops, You Still Made Money
Despite the recent slump in house prices, most homeowners are still sitting on steep capital gains from the recent boom, according to new analysis from Homes.co.nz.
After hitting record highs last year, prices have fallen as the market has turned. The national average value had now returned to its November 2021 level, according to quote value figures released last week.
But Homes.co.nz has analyzed the median price figures for the first quarter of this year compared to those of eight years ago to find out the capital gains that owners have accumulated on average in each of the main centers during of this period.
Eight years was used because it is close to the median length of time people own property.
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The analysis showed that despite selling prices falling in the three months to March, prices in Auckland, Wellington and Christchurch had risen 100%, or doubled, since the first part of 2014.
Auckland’s median was $1.2 million in the first quarter of this year. That was down from $1.33 million at the end of last year, but up from $610,000 at the start of 2014.
Wellington’s median was $1.05 million in the first half of this year, down from $495,000 in 2014, while Christchurch’s median was $725,000, down from $380,000.
Homeowners in Hamilton, Tauranga and Dunedin have seen even bigger gains, with price increases of almost 150% since 2014.
Hamilton’s median was $845,000 in the first quarter, down from $343,000, while Tauranga and Dunedin’s medians were $924,000 and $638,000, down from $370,000 and $252,000 respectively.
The rest of the country was somewhere in between, with a national median sale price in the first part of this year 130% higher than it was eight years ago.
Homes.co.nz chief scientist Tom Lintern said the rate of growth was faster than the old adage that house values doubled every decade, but the market had changed recently.
“The price declines will be felt by those who bought very recently, but most owners will only experience a decrease in the significant capital gains generated since their purchase.”
There was a lot of focus on getting prices down, but for most homeowners, especially if they weren’t planning on selling, it was rising interest rates that would be the biggest issue, a- he declared.
CoreLogic’s latest Pain and Gain report showed that only 0.9% of resales nationwide in the first quarter were at a loss or below the original purchase price. Most houses were still being sold for a profit.
Property coach Steve Goodey said it pays to remember that prices on websites, such as homes.co.nz, are estimates of value, and nothing more.
There is never anything that guarantees the value of a property, even an appraisal by a licensed appraiser, he said.
“Website prices and ratings are all based on comparative sales over the previous 90-120 days, and have no impact on sentiment, which actually drives the market.”
The market boom had been like a huge property-driven party, and now it was over, buyers had retreated, and it was harder to sell the average property, he said.
“It’s the lower prices that attract people now, and it’s the feeling that makes the difference. This is why I emphasize cash flow rather than equity when it comes to real estate. »
ASB and Westpac predicted prices could fall 20% from recent market highs when adjusted for inflation.
But prices are estimated to have risen by around 45% during the pandemic, meaning a 20% drop would bring them back to where they were in the middle of last year.