‘Everyone’s a winner’ in current property market, commentator says.
Landlords are making profits of about $300,000 each time they sell a property but theres a warning that the tide may be about to turn against them.
Corelogic this week released its latest Pain and Gain report, which outlines the capital gains that sellers are making on property around the country.
In the last quarter of 2020, the national median resale gain was $276,000, which was a significant increase on the record price peak of $233,000 recorded in the first quarter of 2020.
But property investors were making slightly more when they sold netting a median $282,000 per sale compared to $270,000 for owner-occupiers.
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Owner-occupiers sold for a profit slightly more often than investors in the quarter, at 98.7 per cent of owner-occupier sales and 98.2 per cent of investors.
But that gap was much smaller than had historically been the case, said Corelogic economist Kelvin Davidson. In 2011, more than 20 per cent of investor sales were for a loss.
This time the gap is pretty much nothing. It shows that, really, its the heat of the market. Everyone is a winner, whether youre an investor or an owner-occupier, whatever sort of property and wherever you own.
Davidson said, while most owner-occupiers recycled any gains they made into their next purchase, unless they were downsizing, investors had the option of cashing up.
For investors it can be a genuine cash windfall. Thats the difference.
The Government is expected to make new housing policy announcements in the coming weeks.
But Davidson said it felt like things would change in the second half of this year. It was looking increasingly likely that there would be restrictions put on investors interest-only lending, he said.
The game seems to be changing for investors.
Many who had bought recently were small-scale investors with only one or two investment properties, he said. They were the type of investors who were more likely to be affected by changes such as the Green Partys suggestion that investors be required to have cash as part of their deposit, not just equity in other properties.
ASB chief economist Nick Tuffley said what happened next for investors would depend on what announcements came from Government over the coming weeks.
It does sound like they are going to put in place measures that may make the financial equation for investors more challenging.
But he said there were still issues around the supply of new homes. It will still be 2025 before we overcome the supply shortfall we have built up. Thats still a backdrop where capital gains may have some allure even if there are other measures put in place.
He said it would also be important to consider the incentives to builders and developers. The silver lining of current high house prices had been a surge in consents issued, he said.