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Chances are your home has made a profit in the past few years. But how much more will you add to your home if you renovate or rebuild? Property reporter Zoe Hunter unravels CoreLogic's latest Pain and Gain report.
A home in Lake Okareka that made $1.1 million at resale has topped CoreLogic's latest Pain and Gain report for the biggest profit made in Rotorua.
The Acacia Rd home was originally bought for $1.05m and sold 3.7 years later in July this year for $2.2m.
It was one of the city's top five properties that made the biggest gain at resale in the last quarter.
That included another home in Lake Okareka on Summit Rd that made $569,500 profit after about 19 years.
A home on Hinemoa St gained $800,000 after 13 years, a Lynmore home made $539,000 after 14.5 years and a Mangakakahi property made $428,000 at resale after almost 15 years.
Rotorua residents who sold their home in the third quarter of 2019 made a median profit of $204,000 per property. The city's gross profit from sales between July 1 and September 30 was $44,691,652.
The median for Rotorua properties sold at a loss was zero, with a gross loss of less than $3000.
CoreLogic senior research analyst Kelvin Davidson said generally when people made a profit at resale the money made goes straight into their next purchase.
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Davidson said the holding period also played a big part in how much profit was made at resale.
"If you hold a property for a period of time you are guaranteed to sell it above the purchase price," he said. "Rising house prices create profits."
Simon Anderson, chief executive of Realty Group, which operates Eves and Bayleys, said the market will continue to move but property improvements such as renovations were where the capital gain was made.
Tremains Real Estate Rotorua manager Malcolm Forsyth said any improvements made on a property will create a capital gain.
"Renovations, if they are done well, play a huge part in that," he said.
"We have seen a lot of that over the last couple of years where people have tidied up properties and resold."
Forsyth said there was currently a huge demand for property, which meant buyers sometimes ended up in a bidding war over popular listings and often resulted in a higher sale price.
Professionals McDowell Real Estate co-owner Steve Lovegrove said the rough rule of thumb was that property values doubled every 10 years.
Lovegrove said when looking at the homes sold after a shorter period of time the capital gain becomes more about the position in the market.
"If you get more houses, it soaks up the demand whatever end of the housing market you look at," he said.
"The pool of houses in Rotorua is not expanding as fast as the population growth and property prices become under pressure."
Lovegrove said there was a continued increase in Rotorua house prices and a strong competition to buy.
"People are also not finding it easy to transition houses and are choosing to upgrade," he said.
"Instead of moving to another property they are investing and improving their current property."
The location also contributed to the capital gain on a property, he said.
Top five biggest profits
91 Acacia Rd, Lake Okareka
Sold: July 30, 2019
Sale price: $2,200,000
Previous price: $1,050,000
Price difference: $1,150,000
Years held: 3.7
1325 Hinemoa St
Sold: September 18, 2019
Sale price: $1,300,000
Previous price: $500,000
Price difference: $800,000
Years held: 13.1
7A Summit Rd, Lake Okareka
Sold: August 20, 2019
Sale price: $920,000
Previous price: $350,500
Price difference: $569,500
Years held: 19.3
11 Janet Place, Lynmore
Sold: September 23, 2019
Sale price: $914,000
Previous price: $375,000
Price difference: $539,000
Years held: 14.5
4 Shirley St, Mangakakahi
Sold: July 1, 2019
Sale price: $538,000
Previous price: $110,000
Price difference: $428,000
Years held: 14.7