Rotorua residents who sold their homes in the first quarter of 2020 made a median profit of $212,000 per property. Photo / GettyImages
Rotorua residents who sold their homes in the first quarter of 2020 made a median profit of $212,000 per property, new data reveals.
Real estate experts say while the local property market performed well in the first three months of 2020 there is now a line in the sand in terms of what happens post-Covid-19.
However, buyer activity is picking up and it will be a few more months until the true path to recovery can be gauged.
CoreLogic's latest Pain and Gain report showed the city's gross profit from sales between January 1 and March 31 was $33,968,885.
The median for Rotorua properties sold at a loss was $19,500, with a gross loss of $39,000.
CoreLogic senior property economist Kelvin Davidson said Tauranga and Rotorua remained solid markets in the first quarter, with property values rising.
"So you'd expect strong resale performance, especially if the property had been held for a long time."
More generally, however, Davidson said there was now a line in the sand with the statistics.
"The world has changed since Q1 and resale performance probably won't be as strong in the coming quarters (with resales themselves probably becoming less frequent, as homeowners sit tight)."
OneRoof editor Owen Vaughan said in the lead up to lockdown it was evident the market was "running hot" in several regions.
"People were starting to make big gains," he said.
"What will be key going forward is not so much in the period immediately after lockdown, where there will be high sales and demand, but the period afterwards.
"That is where we can gauge the path to recovery."
First National principal and Rotorua REINZ spokeswoman Ann Crossley said generally homes sold after a few decades would make a profit.
But a big question mark now hung over what was going to happen in the next few months as the economy recovered from the impact of Covid-19 and lockdown.
"Having said that, there are buyers out there and contracts going in. We won't know the full impact for another six months."
Crossley said some people still had jobs post Covid-19 but others had come back from lockdown without employment and it was unknown how unemployment was going to track in the future.
"Plus, Rotorua still has a housing shortage."
Unlike the Global Financial Crisis, Crossley said the Covid-19 impacts on the property market was "just one big line in the sand".
"All of the impacts have happened at the same time. Tourism has stopped, the income coming into the town has dwindled and people have lost their jobs all within that five-week period."
She said the April market just "didn't exist" and had left a "big black hole" but things were starting to look up.
Professionals McDowell Real Estate co-owner Steve Lovegrove said January and February were strong months.
"We saw a lot of confidence and continued pressure in the market from very low stock levels and high demand.
"But come mid-March everybody ran for the hills as we went into lockdown. There was a significant amount of disruption in the last 10 days of March which did affect the overall quarter.
"The jury is still out when it comes to going forward and what the Covid effect has on prices. We still have the same number of houses, which is not enough. There are still more people wanting houses than there are available."
He said there were no signs of a downturn in property prices and people were still willing to pay reasonable market rate for property.
"The only effect we will see on the house prices will be a confidence issue or if banks don't make the finance available.
"The real estate market is not in the hands of supply and demand it is in the hands of banks' willingness to lend."
Harcourts Rotorua sales manager Colville Barbour said the figures reflected the continued growth Rotorua had experienced in house prices in recent years "where value has been key".
However, Barbour said towards the end of March and all of April the property market experienced a "virtual stall" in property sales due to the lockdown and the inability of buyers to conduct inspections.
In April this year, he said there were only 14 sales compared to 91 in April 2019.
"With the lifting of restrictions and a return to house viewings we have noticed a significant growth in buyer activity.
"This is leading to an increase in sales volume. With the support of low-interest rates and the relaxing of the LVR rules we expect the market to return to normal sooner rather than later."
Tremains Rotorua sales manager Megan Davies said she was familiar with a number of properties that made a gain in the first quarter and that included 19 Tamaki St.
"To say this is a gain when the owner bought for $160,000 almost 25 years ago and sold to move into residential care is testament to them buying location, location all those years ago."
Davies said the gain made at resale for a lake edge Ranginui St home was proof that long-term investments in prime locations would pay dividends.
"Lakeside properties are seeing fantastic gains but many have been in families for years – seldom on the market."
Nationwide interest in the property market was given a boost by the lockdown as digital browsing increased "massively", Davies said.
"This says that there are buyers there and while many will be waiting it out for a special deal, it seems lower prices expected as a result of Covid, maybe a way off.
"We are seeing strong interest in purchasing with good numbers at open homes ... Our achieved prices during lockdown were 6 per cent above average reflecting reduced stock and viewing options.
"The next three months will undoubtedly bring more stock to market."
19 Tamaki St
Sold: January 20, 2020
Hold period: 24 years
Sale price: $770,000
Previous price: $160,000
Gross profit: $610,000
10 Highfield Pl
Sold: January 31, 2020
Hold period: 35 years
Sale price: $688,000
Previous price: $96,000
Gross profit: $592,000
3 Stanley Dr
Sold: January 6, 2020
Hold period: 22 years
Sale price: $750,000
Previous price: $256,000
Gross profit: $494,000
26 Ranginui St
Sold: February 11, 2020
Hold period: 17 years
Sale price: $845,000
Previous price: $352,000
Gross profit: $493,000
173 Okere Rd
Sold: January 21, 2020
Hold period: 3 years
Sale price: $1,050,000
Previous price: $715,000
Gross profit: $335,000
A motorbike overtook a car and hit a pedestrian on Edmund Rd.