CoreLogic’s Pain and Gain report makes for interesting reading – and not just for the remarkable tale of a house in Remuera bought for $2.1 million in July 2003 and then sold for $5.5m in November last year.
Capital gains are a homeowner’s best friend. CoreLogic’s latest Pain and Gain report shows just how good the recent gains have been.
Most homeowners have been on the right side of the ledger – 93.3% of residential property sales in the final quarter of 2023 were for a profit, up from 92.4% the previous quarter – the first increase since the last quarter of 2021.
The median gain also increased for the first time since the end of 2021, rising to $305,000 from $297,000 over the previous quarter.
That house in Remuera
Described as a substantial, private “Hamptons-style” retreat complete with poolside wine fridge (serious fish – ed), the property on Woodley Avenue, Remuera, cleared $3.4m gross profit (before real estate agent commissions and other charges) over a 20-year hold period.
CoreLogic chief property economist Kelvin Davidson said the latest data demonstrated that the trough of the housing market had probably passed.
“More than nine in 10 properties are selling for a profit, although it must be noted this is still quite low compared to the longer-term average and reflective of the fact that national values are still about 11% below their peak,” he said.
“However, the higher portion of profitable resales we’re starting to see is consistent with the rise in property values themselves since September’s trough, alongside wider market forces such as the peak for mortgage rates, high net migration, a resilient labour market, and easing credit conditions.”
Properties owned for longer periods were more likely to have been sold for a profit, whereas those that lost money had been held for a median 2.3 years.
“Counting back about two years from Q4 2023 takes you to the peak of the market, so any properties bought in late 2021 but sold in late 2023 faced very different market conditions in those two periods, and a greater chance of a gross loss. Presumably, many of these resellers had intended to hold for longer, but perhaps had their hand forced due to various personal circumstances,” Davidson said.
Investors vs owner occupiers
Both groups are evenly matched: 92.9% of investor sales made a profit compared to 92.8% for owner-occupiers.
“While the differences in profitable resales between investor and owner-occupiers are pretty small, one reason for the shift could be a longer hold period for investors who sold in Q4,” Davidson said.
“It’s also possible that in a slightly soft market, some owner-occupiers have been willing to take the plunge and make a sale for a price less than what they paid, if they can see an opportunity to upgrade for less on their next property.”
Nationally, the median resale gain for investors was $324,500 – slightly more than the owner occupier figure of $295,000.
The turnaround in the New Zealand housing market has led to the first rise in profitable resales in two years. Things are looking up for sellers. Call 0800 GOODWINS to discuss listing your property.
