Lack of supply, high demand and low mortgage rates are keeping housing investors in the black, according to the latest CoreLogic 'Pain & Gain' report, which tracks whether sellers are making a gain or a loss.
In the third quarter of 2021, a massive 99.1 percent of all house sales resulted in a profit - the most yet, beating the second quarter's 99 percent.
“It’s certainly been a ‘seller’s market’ in the past nine to 12 months, with the supply/demand balance tight and mortgage rates low,” said chief property economist Kelvin Davidson.
“Anybody holding property for the typical seven to 10 years before selling will have had considerable capital gains prior to 2020 to 21 as well – making it almost inevitable that a resale will be at a higher price than previously paid.”
Values have skyrocketed in recent years, particularly since the official cash rate was dropped to a record low in early 2020 to boost the economy as the pandemic hit. Recent reports from a number of sources have put the annual growth above 30 percent.
CoreLogic's latest analysis put the median resale gain at $363,000, a whopping $140,000 more than sellers were getting 18 months ago.
Twenty years ago just 70 percent of sales were made at a profit, and a decade ago, 80 percent.
The most reliable major region to sell during this most recent quarter was Dunedin, where every single sale resulted in a profit. Even Christchurch, the weakest major market in recent years, saw 98.7 percent of sales turn a profit.
Wellington topped the gains in sheer dollar value, the median $555,000. Auckland sellers on average made $505,000.
Those who lost money were down $35,000 on average.
But there is good news in sight for would-be buyers, Davidson said, with profit growth slowing. The Government has made moves to discourage investment in existing properties in favour of new builds, and the Reserve Bank has started hiking the official cash rate, with more likely to come through 2022.
The record sales won't be windfalls for every seller either, he added.
"For many owner-occupiers, a resale gain does not generally equate to a cash windfall, unless they’re downsizing or relocating. In most cases any equity needs to be recycled straight back into the next property purchase, with ‘trade ups’ more likely to involve higher debt levels in many cases too."