OneRoof property report: Tauranga homeowners make hundreds of thousands in profit

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By Zoe Hunter

Multimedia journalist·Bay of Plenty Times·

18 Jun, 2023 05:47 PM6 mins to read

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Te Whatu Ora tells surgeons to consider ethnicity in prioritising patients, AT rolls out a new city parking plan and Prince Harry's court case costs UK taxpayers £1m in the latest New Zealand Herald headlines. Video / New Zealand Herald

Tauranga homeowners who bought a home about eight years ago and sold it in the first three months of this year made a median resale profit of $403,750 despite the “property slump”.

But those who sold after just over a year made a loss of $48,500, new data shows.

The

OneRoof and data partner Valocity analysed all residential sales between 2018 and the first quarter of 2023 and identified 48 suburbs across the country where every house that was sold in the last five years made a profit.

The five-year period was chosen because it covered the tail end of the housing market’s most recent cycle and showed the impact of the post-Covid boom and downturn.

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The figures did not take into account how much vendors spent upgrading or maintaining their properties or how much they owed to the bank.

In Tauranga, 109 - or 96.2 per cent - of properties made a median profit of $403,750 after a median of 8.1 years. Four - or 3.8 per cent - made a median loss of $48,500 after a median of 1.1 years.

That compared to 1724 sales and a median $237,000 profit - and 33 with a $40,000 median loss in 2018.

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In the wider Bay of Plenty, 270 - or 95.4 per cent - made a median resale profit and 14 - or 4.6 per cent - made a loss. The region’s resale gains for the period were $369,000 and $50,000 in losses.

The Bay of Plenty suburbs where every homeowner who sold their home during the first quarter of 2023 made a profit included Rotorua’s Lynmore, Mangakakahi, Sunnybrook, and Tahawai.

The data showed the median gross profit for Q1 2023 in Tahawai was $697,000 in 13.3 years compared to $321,000 in 12.9 years in 2018.

OneRoof editor Owen Vaughan. Photo / NZME

OneRoof editor Owen Vaughan said the research identified the suburbs that escaped the worst of the housing market slump.

Vaughan said the data showed Rotorua was performing “extremely well” pre-Covid and again post-Covid and now everywhere was being hit by the “property slump”.

“But people who were selling during the property slump, including during the first quarter of 2023, were selling with good hold periods.”

Chief executive officer of the Realty Group Ltd, which operates Eves and Bayleys, Heath Young.

Heath Young, chief executive officer of The Realty Group, which operates Eves and Bayleys, said the report covered a period of “huge growth” in the region’s median sale prices from $590,000 in 2018 to $970,000 in February 2022 and back to $825,000 in April 2023.

“It is not surprising that there are suburbs that have all made profits on sale through this period.”

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Young said four of the region’s suburbs achieved 100 per cent profits at resale but “you can’t get away from the fact 96.5 per cent of property sold in the entire Bay of Plenty over this five-year period also achieved gains”.

“Reasons for 100 per cent achievement could include a low number of properties sold through to properties being undervalued through 2018 and 2019.”

Young said the number of properties selling in Tauranga and Rotorua was improving through May and June from a subdued April that was affected by school holidays and long weekends.

“There is definitely a sense that prices are bottoming out with an increase in pre-auction activity, multi-offer scenarios and better open home attendances due to more settled weather.”

Securing finance and the need to sell current properties continued to pose challenges for buyers, he said.

But interest rates “firming up”, inflation reducing, potential election outcomes, and the “big surge” of net migration into the country would support a well-performing market moving forward, he said.

Tauranga Tremain Real Estate managing director Anton Jones. Photo / George Novak

Tremains Bay of Plenty managing director Anton Jones said properties historically “doubled your money” over 10 years so it made sense that homes sold after eight years made a profit and those that sold after a year did not.

The amount of profit made depended on the type of property and what the values were when they were bought, he said.

“If the property was worth $500,000 when you bought it eight years ago, then $400,000 is a good profit. But if your property was worth $2 million and you made $400,000 profit, then that isn’t so good.”

Jones said the market had changed in the last 18 months and people who bought in that period and were reselling now would have lost money as prices were falling.

Demand was starting to pick up again with multi offers in what was typically a quiet few months over winter, however, he said, listings were “drying up”.

Interest rates were no longer rising and prices were likely at their lowest, so it was possibly the best time for first-home buyers to get onto the property ladder before investors re-entered the market, he said.

He also expected the upcoming election to have an impact on the market.

“It is a good time to sell,” he said.

The latest Real Estate Institute of New Zealand data showed the median price in the Bay of Plenty dropped 13.2 per cent year-on-year to $790,000 in May. In Tauranga City, median prices fell 13.5 per cent to $861,000 from $995,000 in May 2022.

Institute regional director Neville Falconer said buyers across the region were reluctant to overpay and continue to feel uncertain about interest rates.

“Many buyers are tending to wait out their options until after the election,” he said.

“Vendors are taking their time to adjust to realistic price expectations, especially those that purchased their property in the peak of the market.”

Zoe Hunter is an assistant news director covering business and property news for the Bay of Plenty Times and Rotorua Daily Post. She also writes for NZME’s regional business publication Money. Zoe has worked for NZME since 2017.