Speculators, investors and homeowners cashing in on Auckland's rampant property market made close to a $200 million capital gain in under 18 months.
Dramatic new figures released exclusively to the Weekend Herald by homes.co.nz reveal the extent to which speculative buying and selling of residential property is driving Auckland house prices.
Between January last year and May this year, more than 1500 properties were bought then on-sold across the Super City for an eye-watering average capital gain of $1600 per day on each sale.
Many of these properties are in poorer areas of West and South Auckland which were traditionally the domain of blue collar workers looking for a first step on the property ladder.
More than 1400 of the "flipped" properties were sold twice, 97 were sold three times, seven were sold four times and two were bought and sold five times in under a year.
On-sold properties - many off-loaded by speculators who had no intention of living in them or even taking possession - made an average capital gain of $114,000 per sale, a 19 per cent mark-up.
The average time between repeat sales was 143 days - just under five months. And one investor made a $120,000 profit after flicking their property two days after purchasing it.
Nine on-sold properties earned more than $1m each in capital gain, though some underwent significant renovation.
Fourteen properties sold for more than twice their initial purchase price and 112 homes were bought and on-sold within two weeks.
The total capital gain made by speculators, investors and on-sellers was $187.7m. It is unknown what proportion of these sellers declared their investment profits or paid tax on their windfalls.
Labour's housing spokesman Phil Twyford said the figures were shocking and revealed the dramatic extent of speculative activity on the Auckland housing market at the expense of "generation rent".
"What it shows is that speculators are feasting off the misery of first home buyers and the many thousands of young Auckland families who are locked out of the market because of these sky-rocketing prices.
"It's even worse that these speculators are hoovering up whole suburbs of the city that have traditionally been where young families have gone to buy their first home and get a start in life."
The problem reflected the imbalance between supply and demand that was driving up house prices, and a tax system which encouraged property speculation, he said.
Homes.co.nz marketing manager Jeremy O'Hanlon said it was reasonable to assume investors and speculators were responsible for most of the on-sell transactions.
"The data shows there's clearly an active market of short-term profit takers who have done very well for themselves.
"It feels a little like stories from the Gold Rush of the 1860s. The opportunity to make $1600 a day is clearly tempting many to try their hand at property flipping."
O'Hanlon urged buyers to check whether properties had been flipped by short-term traders, who often made cosmetic improvements "that don't stand the test of time". Revenue Minister Michael Woodhouse rejected claims that the tax system encouraged property speculation.
Investors who bought property with the intention of resale were already taxed on capital gain. The two-year "bright-line test" introduced last year bolstered the tax rules.
"The bright-line test and associated withholding tax were introduced to help curb short-term speculative activity in property and the Reserve Bank agrees that this is having an effect."
The Government had also removed the ability to claim depreciation on residential buildings and allocated significant funding towards property compliance.
Woodhouse expected the additional information that IRD has been receiving from LINZ since October to greatly assist compliance efforts.
The Government was always looking to ensure rules around property were working effectively. He warned against knee-jerk reactions and said recent changes needed time to bed in.
• The data is based on public sales records provided by Auckland Council to homes.co.nz for residential market transactions between January 2015 and May 2016. It excludes the sale of multiple properties in a single transaction, non-arm's-length sales where there is prior relationship between buyer and seller and transactions with an incomplete sales record.
Average capital gain per sale
19 per cent Average capital gain per sale
$1600 Average capital gain per day
143 days Average time between sales
Repeat Auckland property sales: January 2015-May 2016.