Homes sold in the first half of this year made their owners the highest level of profit on record, new CoreLogic data reveals.
The real estate research firm’s latest Pain and Gain report found that the national median gain for people selling an existing home between January and March was $ 315,000, up from $ 291,000 at the end of last year.
At the same time, the proportion of for-profit resales rose to 98.9 percent, from 98.4 percent at the end of last year and the highest rate in the 25 years the data was collected. .
The previous market peak for properties resold for gain was in mid-2007, but the proportion of for-profit resales is higher now. Then the median gain on resale was $ 129,500.
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Kelvin Davidson, chief economist at CoreLogic, said almost everyone who resold between January and March of this year did so for more than the price they paid for the property, regardless of location. the buyer or the type of property.
“The numbers are stronger than ever and consistent with what we know has happened to the values ââof the properties themselves, which have been pretty much on an unbroken uptrend for a decade now.”
But, driven by low mortgage rates and a tight supply / demand balance, capital gains have intensified in the first three months of this year with an increase of 7.2% in that period alone, has t -he declares.
âIn this type of environment, it makes sense that most homeowners get a higher price than what they originally paid.â
Just 1.1% of resales during the period were made for less than the original purchase price and the median of those losses was $ 20,000.
The national trend of strong payoff and minimal pain was replicated across all major centers, which was consistent with the widespread rebound in sales activity and property values, Davidson said.
In both Wellington and Dunedin, over 99.5 percent of resales made a profit, while the percentage of properties resold for gain in Auckland rose to 98.7 percent.
The percentage of for-profit resales edged down in Hamilton and Tauranga to 98.1 percent and 98.5 percent.
Among the major centers, Christchurch had the lowest share of resales above the original purchase price of 97.6 percent. But this proportion was the highest for almost six years.
Wellington home sellers posted the highest median resale gain at $ 506,000, up from $ 446,500 at the end of last year.
Auckland and Tauranga both recorded median resale earnings of over $ 400,000 at $ 455,000 and $ 402,500 respectively.
Many provincial centers also performed well with 100 percent of resales to Gisborne, Hastings, Palmerston North and Whanganui and 99.5 percent of resales to Nelson above the original purchase price.
The size of the gains in the provincial regions was also healthy. Gisborne’s median gain from resale was $ 350,000 while that of Hastings was $ 410,000.
Davidson said many property sellers during this time would have “locked in” significant equity gains.
âBut for most homeowners, unless they downsize or move to a cheaper location, any gains made would just be recycled into their next purchase.
âIn fact, they would often come with more debt too. It’s different for investors, with some potentially choosing to take their winnings. “
CoreLogic expected resale numbers to remain strong during the April to June period, but predicted a slowdown later in the year.
“We thought there would be a market slowdown in the second half of this year anyway, and the government’s investor tax policy changes at the end of March only underscore this point,” he said. Davidson said.
“The economics of investing have become more difficult, and while we don’t anticipate that removing interest deductibility will result in a wholesale sale by existing owners, some may need to speed up the sale.”
The market was now at a turning point, he said. “I expect resale numbers to ease somewhat by the end of the year as market conditions ease and value growth slows.”