CoreLogic says resale gains were "stronger than ever" across the country. Photo / Getty Images
CoreLogic says resale gains were "stronger than ever" across the country. Photo / Getty Images
Home sellers are making big profits in Rotorua's heated property market, new figures show.
CoreLogic's latest Pain and Gain report showed at least 98.5 per cent of Rotorua sales between January 1 and March 31 made a profit.
Sellers made a median resale gain of $344,500 per property and a gross gain of $46,605,992.
Resale gains were "stronger than ever" across the country with almost everyone who resold their home in the first quarter selling above their purchase price.
CoreLogic's latest Pain and Gain report showed Rotorua's share of profit-making resales between January 1 and March 31 was 98.5 per cent or above.
Residents made a median resale gain of $344,500 per property and a gross gain of $46,605,992.
Rotorua Professionals McDowell Real Estate co-owner Steve Lovegrove. Photo / File
One Rotorua property made nearly five times the amount it was first bought for in almost 20 years.
Rotorua Professionals McDowell Real Estate co-owner Steve Lovegrove said a full renovation of the McDowell St property was a "key factor" in helping to achieve its "exceptional price".
The property sold in February for $870,000 after it was bought nearly 20 years ago for $167,000 - achieving a $703,000 gain.
The property had its original kitchen and the rest was fully renovated to a "very attractive standard" making it easy to move into, Lovegrove said.
"It had multi-offers on it."
Lovegrove believed people were more confident investing in their properties.
"People are very fearful should they chose to sell they might be left without something to move into. The decision to renovate or expand is a very realistic option for a lot of people."
However, not many properties hitting the market had been renovated to sell.
"Those [that have been renovated] hit record-smashing prices and it is indeed a profitable exercise but it's also a very big commitment."
People were instead "renovating to rent", he said.
Managing director of the Realty Group Ltd, which operates Eves and Bayleys, Simon Anderson. Photo / File
Simon Anderson, managing director of the Realty Group, which operates Eves and Bayleys, said a lot of people were sitting back and waiting to sell their properties.
In the meantime, they were renovating, which is where the capital gain came in, he said.
"People sell for all sorts of reasons but typically they don't sell for capital gain. That is just the result. A lot of people are thinking they will sell at some stage but they have nowhere to go.
"Listings are low in the market currently."
First National Rotorua principal and Real Estate Institute of New Zealand Rotorua spokeswoman, Ann Crossley. Photo / File
First National Rotorua principal and Real Estate Institute of New Zealand Rotorua spokeswoman Ann Crossley said there was not a lot of house "flipping" going on in Rotorua.
But, Crossley said there was a lot of people who would have moved who were now choosing to renovate instead.
"The lack of stock has made people spend or improve their properties to offer the amenities they may have found in a new home."
CoreLogic's chief property economist Kelvin Davidson said Tauranga and Rotorua markets had seen strong price rises, which meant the "gains" were also high.
"However, as with national trends, I'd anticipate some softer trends as we get into the second half of the year."
Nationally, profit-making property resales between January and March 2021 increased to 98.9 per cent - the highest reading in the 25-year history of CoreLogic's data series.
The median resale gain was $315,000 mostly accumulated over longer holding periods up from $291,000 in Q4 2020. At the previous peak in mid-2007, the median resale gain was just $129,500.
Davidson said the figures were "stronger than ever" with almost everybody who resold in the first quarter of the year selling above their purchase price regardless of location, buyer or property type.
"Capital gains intensified in the first three months of 2021...," he said.
"However, for most owner-occupiers, unless they're downsizing or moving to a cheaper location, those gains are simply recycled back into the next purchase – and in fact, would often be accompanied by more debt too.
