The longest downturn

In the June quarter, 13.1% of New Zealanders who sold a house took a loss – the highest share since 2012, up from under 1% in early 2022. But almost nine in 10 sellers still made money, at a median gross profit of $280,000.

Cotality’s chief economist Kelvin Davidson calls the current “downphase” the longest and deepest in at least 30 or 40 years. It sounds bad, but there’s no reason to panic. Relatively few sellers are being forced into that position. In any case, the major downturn happened back in 2022 and 2023. Lately, values have simply stopped moving. Cotality has the national median value at $804,303 in July, down 1% over three months. REINZ’s separate measure puts the median sale price at $760,000, down 0.7% on a year ago, with sales volumes off 10%.

Holding period, not postcode, is the key variable

Loss-making resales hit 20.9% in Auckland and 18.4% in Wellington this quarter, against 8% in Dunedin and 5.3% in Christchurch. Auckland has taken a beating, for sure. But why?

REINZ ties differences to a labour market split, with unemployment running at 6.0% in the North Island against 3.7% in the South. Cotality’s numbers also tell a story: sellers who made money had held their property for a median 10.4 years. Sellers who lost money had held for just 4.3 years. These are buyers who bought at or near the 2021 peak and are selling into a market that hasn’t recovered. The numbers could reflect people increasingly choosing to wait rather than sell at a loss, helped by an economy where employment has held up enough to make that waiting affordable.

Nowhere is the mismatch starker than apartments. Cotality’s data shows 45.4% of apartment resales this quarter went for a loss – the weakest result since 2010, with unit values down roughly 6% over the past year. For an asset class landlords have leaned on for yield, that’s a specific and current risk to price in.

Sentiment is worse than the numbers

The actual price data is soft, but Tony Alexander’s latest agent survey, run with NZHL, is reading much worse. A net 41% of agents reported falling prices in their area – near the worst reading since mid-2024. Forty three percent cited “fear of over-paying” among buyers, up from 22% before the Middle East conflict pushed petrol prices and rate expectations higher.

It’s not that the market is worse than the headline numbers suggest, rather, participants are pricing in more downside risk than the current data justifies, largely for reasons (war, election) that are exogenous to housing itself.

For landlords specifically, the added variable is the November election. Investors might worry that interest deductibility, only fully restored last year, could be wound back under a different government.

Should you sell in the current market?

It depends. A weak market cuts both ways. If you’re both buyer and seller in a flat market, the discount you take on the sale is roughly matched by the discount you get on the purchase. Timing barely matters.

If you’re selling to get out of property altogether (cash out, no repurchase), this is where the holding period decides the outcome, per Cotality’s numbers. If you bought before 2016–2017 you’re very likely still ahead – median gain for profitable sellers is $280,000, off a median 10.4-year hold.

If you bought at or near the 2021 peak, especially an apartment or something in Auckland/Wellington, you’re in the cohort taking the median $60,000 loss, and nothing in the data suggests that will change any time soon.

If you’re a landlord specifically weighing selling out of a loss-making rental the maths changed this year. Full interest deductibility (restored April 2025) makes holding cheaper than it’s been since 2021. The calculation doesn’t just rise on the timing of a market recovery. The question is: “Can I service this at improved after-tax cashflow while I wait?” For most geared investors, the numbers now favour holding over crystallising a loss, unless there’s a forcing event – job change, portfolio consolidation, needing the equity elsewhere.

There is, however, one group where “sell now” has merit: 45.4% of apartment resales went for a loss this quarter, the worst since 2010, and there’s no clear catalyst pointing to apartment values recovering ahead of houses. If someone’s deciding between holding a loss-making apartment and a loss-making house, the house has a better case for patience.

Loss-making resales by region, Q2 2026

Region	Loss-making resales, Q2 2026
Auckland	20.9%	North Island; unemployment 6.0%
Wellington	18.4%	North Island; weakest days-to-sell
Dunedin	8.0%	South Island
Christchurch	5.3%	South Island; unemployment 3.7%
National	13.1%	Highest share since 2012

Want to talk through what this means for your portfolio? Call us on 0800 GOODWINS.