The ten "top" flippers held each property on average for just 70 days, with each netting a $70,000 profit. Photo/123rf
The ten "top" flippers held each property on average for just 70 days, with each netting a $70,000 profit. Photo/123rf
The country's most prolific property speculators were banking $1000 a day in capital gains at the height of the housing boom, squeezing the most profit from poor neighbourhoods and centre-city apartments.
A Weekend Herald investigation into house trading found in the six years to 2018, the busiest professional operators wereflipping more than 10 homes each, every year.
The 10 "top" flippers - most who conducted their business through registered property investment companies - held each property on average for just 70 days, and each netted a $70,000 profit.
Between them, they sold 750 homes over the six years analysed, making an estimated $50 million in gains.
Myma Copplestone, who flipped 63 properties with an average gain of $91,000 through her company MCK Enterprise, says although the numbers looked big on paper, after renovation costs and agent fees, sometimes she made as little as $8000 a sale.
"Renovation costs can blow out massively. And if the market is slow, like now, you have holding costs — you have to pay the mortgage all that time until you sell," she says.
However, not all of the properties were renovated - and of those that were, none of the sales checked by the Herald required building consents, meaning it was unlikely there were major additions.
OneRoof property commentator Ashley Church said the group of flippers who renovated were doing a public good by upgrading housing stock.
"But the second group, who just buy a property and sit on it for a few months and make a profit off the fact the market is rising - as far as I'm concerned that's a blight on society," he said.
"They're not adding anything, just using it as an opportunity to make a dollar."
OneRoof property commentator Ashley Church says flipping can be a "public good" if homes are renovated. Photo/File
In total during the boom years, all speculators brought in $1.2 billion off flips - defined as residential properties bought-and-onsold within six months. There were more than 14,000 such sales nationwide.
Most of the activity was in Auckland, where central-city apartments (popular with foreign buyers) and houses in Manukau were hardest hit.
At flipping's peak in 2015, nearly one in 10 house sales in Manukau were by owners who held the property for less than six months. Nationwide, flipping was 4.6 per cent of all sales.
Homes in areas like Clendon and Mangere were targeted by speculators. Photo/Mike Scott
Data shows flipping plummeted alongside other investor activity as the market began to plateau in the past couple of years.
However, Auckland Council chief economist David Norman said despite some policy changes such as the foreign buyer ban and loan-to-value making property investment less attractive, without a wide-ranging capital gains tax it was likely once the market picked up again, flipping would too.
Auckland Council's chief economist David Norman said a stronger capital gains tax was needed to curb speculator behaviour. Photo/File
HOW WE DID IT
The Weekend Herald created a complete list of "flips" from property data held by Land Information NZ. LINZ does not hold historical ownership changes for properties, but we were able to use weekly backup of the data (provided by LINZ) to reconstruct a timeline for these properties, showing how their ownership changed over time.
The data goes from December 2012, when digital versions of the records began, to the present day.
We searched this timeline for every property in New Zealand that changed hands twice or more within 180 days. For our definition of flipping, we excluded all the partial ownership changes, where some of the same owners remained. For example, joint ownership situations where owners were added or removed were not counted as having changed hands.
After excluding some special cases, such as Housing New Zealand or construction or trustee companies, we ranked the owners based on the number of flips they participated in as the flipper. These are the companies that have done the most flipping since January 2013.
We then used QV data to analyse the difference between the purchase price and subsequent sale price to calculate the flippers' "gain". This does not include any fees paid to agents or lawyers, or renovation cost. Some sales didn't have price data available. Averages rely on known prices.
Other property data provided by Valocity and CoreLogic.
