Bayleys news & articles

Many happy returns

Tags: Residential Residential Views

Across the country, vendors are cashing in and banking big returns by selling property in our regional profit hotspots

Property prices might have cooled slightly over the past year but, around the country, vendors are still banking big returns, with resale gains at historic highs. Statistics from CoreLogic’s latest quarterly Pain and Gain report show that over 96 percent of all resales in the previous quarter resulted in a gross profit, with a median profit of $181,000 per property.

Owner-occupiers fared slightly better than investors, with 97 percent making a profit, compared with 95 percent of investors. This figure is reflected in the difference between the resale of apartments and houses: over 96.5 percent of houses sold made a profit, compared with 87 percent of apartments, which are more often bought by investors.

This is not to say that investors aren’t smiling, as they have made great returns on their investments. On average, each investor pocketed a $191,000 gross profit on the resale of their property, compared to $180,000 for an owner-occupier.

In the main urban centres, Wellington posted the smallest percentage of loss-making sales, with a figure of 1 percent. This is a reflection of the capital’s strong property market, which remained buoyant over winter due to strong demand and low listings numbers. The average profit in the city was $222,500 (40 percent of the city’s average house price).

Dunedin – which continues to see low stock levels – posted the second-lowest percentage of loss-making sales. Only 2.2 percent of resales in the city resulted in a loss, with an average profit of $136,750 (30 percent of the average house price).

In Hamilton, where house prices are down slightly for the year, 2.3 percent of resales made a loss, with an average profit of $208,250 (40 percent of the average house price).

Against a backdrop of a 4.5 percent annual increase in median prices, only 2.9 percent of resales in Tauranga made a loss, with an average profit $235,000 (37 percent of the average house price).

In Auckland, while a slightly greater proportion of sellers (4.1 percent) made a loss; others profited handsomely with an average gross gain of $355,250 (42 percent of the average house price). Christchurch saw 12 percent making a loss; though the average profit of $137,000, represents 33 percent of the average house price.

As house prices remain steady around the country, the percentage of resale losses remains small. In those areas where resale values have taken a major hit, other forces are in play. In Christchurch, the 12 percent figure includes earthquake-damaged houses. Many of these homes have been sold for a reduced price, the owners having claimed on their insurance.

Other areas posting double-digit resale losses have also recently suffered major natural disasters. In earthquake-struck Kaikoura District, 21.4 percent of resales posted a loss. It is a similar picture in both Buller District and Grey District. Earlier in the year, these areas were hit by Cyclone Gita and suffered major flooding. In the last quarter, they experienced loss-making sales of 39.5 percent and 28.2 percent, respectively.

Overall, across the country, major resale losses were few and far between. Other stand-out profit-making districts in the North Island include Waipa, Horowhenua, Kapiti Coast and Masterton, where loss-making sales were less than one per cent of the total. In Rotorua, Hastings and Palmerston North, there were no resale price losses at all.

Around the South Island, top performers include the Tasman District, Nelson and around Queenstown.

As the spring selling season kicks in, market activity, like the weather, is warming up. Across the country, house prices are up – REINZ’s August House Price Index has risen 4.1 percent year-on-year, to a record high – and inventory is down. So whether you’re an investor or an owner-occupier, now could be a great time to put your property on the market and cash in on your own property hotspot.

Related articles