People who sold Auckland and Wellington houses late last year pocketed a median profit of close to half-a-million dollars.
Property analyst firm CoreLogic, which has been tracking the market since the mid-1990s, says there's never been a more profitable time.
"It's not surprising because we know prices have been rising for a pretty steady period of time - go back 10 or 15 years really, the New Zealand housing market has been on an upswing," senior property economist Kelvin Davidson told Newshub.
"If anything, it accelerated at the end of 2020... the acceleration we saw in the property market at the end of last year was pretty stark. Basically anybody reselling - especially if they held for five, 10 or 15 years, was almost certain to get a price higher than what they paid."
Nationwide, 98.4 percent of residential properties sold between October 1 and December 31 went for more than what the buyer paid - the highest figure CoreLogic has ever reported, and the first time it's been above 98 percent since 2007.
The median profit was $276,000 - more than twice what it was in 2007, and up from $235,000 in mid-2020. Investors did better than owner-occupiers - making a median $282,000 compared to $270,000.
In Wellington, the median profit was a whopping $445,000 - enough to have bought the average house outright as recently as 2014. In Auckland, it was $406,000; Hastings, $365,000; Queenstown $340,000; Hamilton, Dunedin, Palmerston North, Nelson, Napier and Tauranga were around $300,000; Invercargill $180,000; and Christchurch, which has experienced lower house price growth after the quake rebuild, $153,000.
The smaller centres also had sellers swimming in cash - the median profit in Gisborne was $326,500, Rotorua $280,000 and Whangarei $253,000.
Davidson said the escalating prices are posing problems for those who don't already own property, predicting a year of "property politics".
"That gap, that ownership divergence - whatever you want to call it - between the haves that are in the market and benefiting from low interest rates as well as capital gains, versus those that would like to be in the market and find the deposit requirement just rising ever out of reach, that gap and that divergence is quite a big issue," said Davidson.
In Gisborne, Hastings, Napier and Nelson, as well as much of rural New Zealand, not a single property in the fourth quarter of 2020 sold for less than what the buyer paid for it. Whangarei and Palmerston North had only a single property each sell at a loss, Rotorua two and Invercargill three.
"Generally speaking, property markets around regional NZ fared well in the fourth quarter of the year, with profit-making resales common," the report read. "Indeed, the bulk of the provincial markets had no loss-making property resales in Q4 2020, with only the West Coast really showing any kind of sluggishness."
The average length of time a profit-making property had been owned before sale was 7.3 years - the lowest in more than a decade.
"That serves to highlight the effects of the continued growth in overall property values that we’ve seen in recent years and how that means some owners only feel the need to hold for shorter periods than before – especially investors, who can achieve their desired capital gain with a shorter hold period," the report said.
Loss-making properties were held for 4.1 years on average, longer than usual.
"Reduced mortgage stress in recent years - due to ultra-low interest rates and also because the loan to value ratio speed limits... have meant that borrowers have had to inject more equity at the start - means that people are able to take more time before they potentially face little other choice than to sell at a price below what they originally paid."
Even apartments - historically a much riskier bet than standalone houses - are a safe investment at present. Only 10 percent sold for lower than their purchase price - in the past that figure has risen as high as 50 percent.
The average loss made on a sale was just $25,000.
Davidson said it was likely profits would remain strong in the first half of this year, but start to be reined in later on.
"In addition to loan-to-value ratios being reintroduced, the Reserve Bank now also has to explicitly report on how its official cash rate decisions, which target inflation and employment, might impact housing prices. The Government also wants the Reserve Bank to look further at possibly restricting interest-only lending for investors and also how debt to income caps for mortgages might work
"It all just reinforces how investors are in the sights of the regulators and if fewer of them can act in the market, it'll reinforce the chances of a slowdown later."
Economist Cameron Bagrie of Bagrie Economics said targeting interest-only loans could help curb demand and make it fairer to owner-occupiers and first-home buyers.
"In excess of 40 percent of lending into the residential investment market is interest-only," he told The AM Show on Tuesday.
"[Investors are] not paying principal. If we change that dynamic so they've got to pay principal and interest, you are going to change the cashflow on residential investment literally overnight. They're not going to be able to chase the yields down as low, they're not going to force the valuations up.
"When we take on a mortgage we tend to pay the principal and the interest. The cash goes out the door - that sort of caps how much [we] can pay."
The full Pain and Gain Report can be read on CoreLogic's website.