Resales of homes in the two years since Covid arrived in New Zealand have increased as have resale profits, new analysis from OneRoof shows.
According to data from OneRoof's data partner Valocity, 8700 properties were bought and resold in the two years to April 2022 – up 26 per cent on the two years to the end of April 2020.
The data also showed 248 properties were bought and resold more than once in the past two years - almost double the amount between April 2018 and April 2020.
Resales, however, represented less than 4 per cent of total property transactions over the past two years.
The data showed there was money to be made in flipping during the post-Covid property boom.
The nationwide average resale gain for the two years to the end of April 2022 was $175,028 per property, $100,000-plus more than the average resale gain for the previous two-year period.
The total gain from the 8700 flips over the past two years was just over $1.5 billion – triple the amount made from flipping in the two years to April 2020.
Auckland had the most resales, but the number of flips rose from 1527 in the two years before Covid to 2686 post-Covid, and the average gain jumped from just under $80,000 to $215,000 over the same period.
Waikato also had plenty of resale action, with the number of flips in the region rising from 764 to 1138 over the same period, and the average gain increasing from $58,451 to $162,881.
Canterbury's resale numbers jumped from 1114 to 1584, while the average gain rose from just over $87,000 to more than $168,000.
Other areas to record resale increases include Taranaki, Tasman and the West Coast – in the West Coast resales shot up from 34 to 107, with average gains rising from $19,115 to $71,876.
However, resales in Wellington, Hawke's Bay, the Bay of Plenty and Marlborough fell over the two years to April 2022 compared with the two years to April 2020.
Wellington, for example, decreased from 628 pre-Covid to 589 post-Covid. Hawke's Bay slipped from 313 to 241 and the Bay of Plenty declined from 574 to 431 over the same period.
Despite resale numbers falling, average gains in those areas were still up. In Hawke's Bay the average gain increased from just over $70,000 pre-Covid to $145,448 post-Covid, and in Wellington the average gain nearly doubled from $91,685m to $170,569.
In the Bay of Plenty, the average gain increased from just over $71,000 to $198,477.
Wayne Shum, senior researcher at Valocity, said that while house-flipping had trended up overall since Covid arrived, numbers had tapered off this year as a result of higher interest rates.
The higher rates have made holding costs too high, meaning big gains would now be unlikely, he said.
"As the market appreciated you could have got away with it but we're not seeing the price growth we saw in the last two years.
"As house prices go down you may not even get back what you spent on the renovation – unless you can really control costs an amateur would not make it."
In South Auckland, where flipping was found to be strong post-Covid, Ray White Manukau co-owner Tom Rawson said: "There were some sales with longer settlement periods – six or nine months - where the buyer resold before his purchase settled."
Rawson estimates about 20 per cent of flips would have had visible improvements added, such as paint jobs, new carpet, kitchens, or bathrooms, but says 80 per cent of sales had "non-visible" value added.
"They'd have done the work of engineering surveys or consents. It's like a conveyor belt - someone does that first stage of the journey then sells it to someone who picks up a shovel-ready project to actually build this."
Rawson had noticed flipping slowing down this year, saying buyers were dealing with the new reality of more expensive holding costs, including higher interest rates, the difficulty of getting tradies and also materials shortages.
Harcourts Mt Albert agent Aman Gulia, who specialised in finding properties for his database of developers, said people who bought in early 2021 and sold by the end of the year made a lot of money. "But a lot of people bought late 2021 and have either lost a lot of money or are in the news now as the people unable to settle, losing deposits, defaulting on mortgages."
Gulia advises against buying properties to flip them. "It's like gambling. If you can't afford to lose, don't bet it."
In Auckland's pricey suburb of Herne Bay, astute sellers had some big wins post-Covid.
A renovated five-bedroom villa on 1246sq m of land on Hamilton Rd switched hands in June then again in October last year, with the second sellers making a cool $1 million over four months on their $12m sale.
Over on the North Shore, a four-bedroom house on Lake View Rd in Takapuna also reaped a big reward for resellers.
In March 2020, buyers paid $5.9m to the family who built the house on Lake Pupuke back in the 1970s – 14 months later they sold for $7.62m, gaining $1.72m.
Some resales saw even bigger gains. A renovated five-bedroom waterfront home on Argyle St in Herne Bay sold in June last year for $22m –$8.2m more than vendors paid in February 2019.
But the listing agent, Ollie Wall of Graham Wall Real Estate, said that was not all pure profit.
He estimated the vendors spent more than $5m gutting the 1990 shingles house and adding a full-size tennis court with a pavilion. They also put in a gym, an infinity swimming pool cantilevered over the beach, and added a putting green - which took 18 months to complete.
The sellers moved around the corner to a smartly refurbished waterfront Marine Parade concrete villa. They paid $23.5m for the property in September 2020 – and that resulted in an $18.25m gain for the previous owners over 18 years, just over $1m a year.
An even bigger annual gain was a $29m sale last November of a Lawrence Sumich-designed mansion on a 4188sq m section on Remuera Rd. The sellers paid just over $2.539m in 2001 for what was a near-new build, resulting in a profit, at least on paper, of just over $26.46m over 20 years – that's $1.29m a year.
Those sorts of gains won't end there, said Wall, as waterfront properties were worth even more, when and if they sell. "I don't think waterfront is anywhere near the value it should be. It hasn't gone up at nearly the same rate as general value rises."
Over in Vaucluse, a suburb in eastern Sydney, an "ordinary" house fetches $5m. People would pay more than $80m for waterfront but Wall said those kinds of prices haven't been seen in New Zealand.
He said growth was now coming from top-end, architecturally designed new builds with buyers prepared to pay for someone else's effort to build the house.
Pie Funds CIO Mike Taylor makes his annual picks for the year ahead.