Holding Cost While Unsold Calculator NZ

Updated  Interest only, not principal. Repaying principal reduces debt rather than costing money.
Quick answer A house with $620,000.00 owed at 6.50% costs $949.62 a week to hold while it sits unsold, or $4,115.00 a month. After 8 weeks on the market that is $7,596.92 already spent. Waiting another 6 weeks costs a further $5,697.69, so a later offer has to beat the one in front of you by that much simply to break even.

Every week a house sits unsold costs its owner money, and the cost is invisible in a way that makes it easy to ignore. Nobody sends an invoice for it. The interest keeps accruing, the rates instalment arrives on schedule, the insurance renews, the lawns get done before the weekend viewing, and none of that presents itself as the price of holding out. It only becomes visible when an offer arrives that is slightly below what you hoped for and the question becomes whether to take it. At that point the relevant number is not the gap between the offer and your expectation but the gap between the offer and what a later, better one would be worth after paying to wait for it. That figure is usually larger than people expect, and on a mortgage of any size it accumulates fast enough to swallow the difference between a disappointing offer and a good one.

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The mortgage
Annual outgoings
While it is on the market
Costs you every week
$949.62
$4,115.00 a month
Spent so far
$7,596.92
over 8 weeks on the market
A later offer must beat today's by
$5,697.69
to be worth waiting 6 more weeks

Where the weekly cost comes from

CostA yearA weekShare
Mortgage interest$40,300.00$775.0081.6%
Council rates$3,600.00$69.237.3%
Insurance$2,200.00$42.314.5%
Body corporate levy$0.00$0.000.0%
Upkeep and maintenance$1,200.00$23.082.4%
On the market extras$2,080.00$40.004.2%
Total$49,380.00$949.62100.0%

Interest is 81.6% of the weekly cost, which is why the size of the mortgage matters far more than any of the other items when deciding how long to hold out.

The decision in front of you

Weekly holding cost$949.62
Weeks you would wait6 weeks
Cost of waiting$5,697.69
So a later offer must beat today's by$5,697.69
Which against the mortgage is about0.92% of the mortgage

Holding out is worth it only if you believe a better offer is more than $5,697.69 higher and will actually arrive within 6 weeks. Both halves of that have to be true.

What each further month costs

If it takes anotherHolding costTotal since listing
2 weeks$1,899.23$9,496.15
4 weeks$3,798.46$11,395.38
8 weeks$7,596.92$15,193.85
13 weeks, a quarter$12,345.00$19,941.92
26 weeks, half a year$24,690.00$32,286.92
This counts interest only, not principal. Repaying principal reduces your debt rather than costing you anything, so including it would overstate the cost of waiting. Interest is calculated on the balance you enter and held constant, which is close enough over a few months but not over a year. Check your insurance policy if the house is empty, since many policies restrict or exclude cover on an unoccupied dwelling after a period, commonly sixty days, and an uninsured house on the market is a far larger risk than any holding cost. If you have already bought your next home, bridging finance usually carries both a higher rate and a hard time limit, and the time limit is normally the binding constraint rather than the interest.

Interest is almost the whole number

On any ordinary New Zealand mortgage the interest dwarfs everything else in the holding cost, and the practical consequence is that two vendors with identical houses can face completely different decisions about whether to hold out. Someone with a small mortgage can afford to wait for the right buyer almost indefinitely, and someone who has borrowed heavily cannot afford to wait at all. That is not a difference in patience or negotiating skill, it is arithmetic, and it is worth knowing which of those positions you are in before an offer arrives rather than during the twenty minutes you have to respond to it.

The offer in front of you is the benchmark

Deciding whether an offer is good is a comparison, and the mistake is comparing it against your hopes. The correct comparison is against the alternative, which is the best offer you might get later minus the cost of waiting for it. Rejecting an offer to hold out for one that is ten thousand higher is only worthwhile if that offer materialises before the holding cost eats the difference, and on the default figures here that is a little over ten weeks. A better offer that arrives in week eleven has gained you nothing at all.

Time on market is not neutral

The cost above is the direct one. There is a second effect that cannot be put in a spreadsheet: buyers treat a long listing with suspicion, and agents will tell you the enquiry rate on a property drops away sharply after the first few weeks because the people actively looking have already seen it. That means the probability of the better offer arriving is not constant over time, and the longer you wait the lower it usually gets. The arithmetic on this page assumes nothing about that, which means it understates the case for taking a reasonable offer early.

Worked example

A vendor owes $620,000.00 at 6.50%, which is $775.00 a week in interest. Rates of $3,600.00 a year add $69.23, insurance of $2,200.00 adds $42.31, upkeep of $1,200.00 adds $23.08, and $40.00 a week of standing charges on an empty house brings the total to $949.62 a week, or $4,115.00 a month.

The house has been listed for 8 weeks, so $7,596.92 has already gone. An offer has arrived and the vendor is considering holding out for 6 more weeks, which would cost a further $5,697.69.

That means a later offer has to be more than $5,697.69 above the one in front of them before waiting has produced anything, and it has to arrive within the six weeks. Interest alone is 81.6% of the weekly cost.

How this is calculated

Mortgage interest is the balance multiplied by the annual rate, divided by fifty-two to give a weekly figure, using the balance as entered rather than reducing it over time. Each annual outgoing is divided by fifty-two in the same way, and the on the market extras are already weekly. The weekly holding cost is the sum of all of them, and the monthly figure is that multiplied by 52 and divided by 12 rather than by four, since a month is longer than four weeks. Cost so far is the weekly figure multiplied by the weeks already listed, and the cost of waiting is the same multiplied by the further weeks. The amount a later offer must beat today's by is exactly that cost of waiting, since anything less leaves you behind where you would have been by accepting now.

Official sources

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Frequently asked questions

What counts as a holding cost on an unsold house?

Anything you keep paying because the property has not sold. Mortgage interest is normally the largest, followed by rates and insurance. If the house is empty there are usually standing utility charges, and most vendors keep spending on lawns, cleaning and presentation for as long as viewings continue. Principal repayments are not a holding cost, because that money reduces your debt rather than disappearing.

Should I include mortgage principal in the calculation?

No. Principal repayments move money from one pocket to another rather than costing you anything, so including them overstates the cost of waiting. Only the interest portion is a genuine expense. That is why this calculator asks for the balance and the rate rather than for your repayment amount, since the repayment mixes the two together.

Does waiting longer actually get a higher price?

Sometimes, and the honest answer is that nobody knows in advance for a particular property. What is reliably true is that a listing which has been on the market for a long time is treated with more suspicion by buyers, and that the pool of people who have not yet seen it shrinks every week. This calculator does not predict whether waiting works. It tells you the price a later offer has to beat, so you can judge whether that is plausible.

What if I have already bought my next house?

Then the holding cost is considerably higher than this page shows, because you are carrying two properties and probably paying bridging finance at a higher rate than your ordinary mortgage. Enter the bridging balance and rate rather than the original mortgage if that is the position you are in, and be aware that bridging arrangements usually have a time limit that matters more than the interest.

How long do houses take to sell in New Zealand?

It varies enormously by region, price bracket, property type and the state of the market, and any single national figure conceals more than it reveals. Rather than relying on an average, ask your agent for the median days to sell for comparable properties in your suburb over the last few months, which is data they can pull, and use that as the basis for how many more weeks to model here.