Our latest Pain & Gain Report is out, which shows that the quiet NZ property market for Q1 of 2019 delivered total nationwide resale gains of $2.9 billion. This represents quite the fall from the previous quarter’s $4.4 bn but it’s no surprise as volumes across the market were generally sluggish.
The good news is that even though it was a much quieter Quarter, our property market is still going through a long upswing in average values, despite Auckland and Christchurch following weaker paths lately. 96.5% of kiwis selling property still realised a re-sale gain (a slight increase on the previous quarter’s 96.2%) and their median resale profit was $189K (down a touch from $200K for Q4 2018).
Just 3.5% of property sellers suffered a resale loss (where the sale price was less than their original purchase price). Totals were $22.3m nationwide and a median $20,000.
People typically hold onto their properties for 7-8 years, and that length of ownership is almost guaranteed a gross profit, especially since low mortgage rates and unemployment have minimised any pressure to push through a quick sale for a low price.
Houses Vs Apartments:
96% of houses resold for a gain in Q1 2019 which is again a strong and a steady result, but apartments saw a 1% increase against the previous quarter, with 90% re-selling for a profit.
Investors Vs Owner-Occupiers:
Investors (96%) remain slightly less likely than owner occupiers (97%) to enjoy a resale gain but the important thing to note is that for investors, that gross re-sale profit result is the highest it’s been since 2007!
It’s an interesting market dynamic: the gap between owner occupiers and investors isn’t large and these latest figures certainly aren’t suggesting that investors have been tempted to quickly head for the exits on the back of new regulations such as extra insulation standards or the tax ring-fence for rental property losses. The scrapping of the capital gains tax proposals suggests that this situation is unlikely to change in the next quarter or two either.
The renovation factor:
Just as generations of kiwi DIY lovers would hope, renovations also make it less likely that a property will sell below its original purchase price. Disclaimer though: the renovation factor analyses those with a building consent recorded, so these are more the ‘walls getting knocked down and houses being extended’ type of renos vs a lick of paint or a quick recarpet.
Only 0.3% of resales in Q1 2019 that had previously been renovated sold for less than the purchase price.
Main Centre performance:
In the main centres, resale gross profits are very common in Dunedin, Wellington, Tauranga, and Hamilton, but less so in Auckland and Christchurch (which is consistent with values having softened in these two markets).
Outside perhaps the West Coast and parts of Canterbury, the rest of New Zealand also showed strong results for gross resale profits.
That’s my quick round-up, you can download the full report here: it’s got so much info it: well worth a read if you want/need to keep up to date with the particulars of the NZ property market.