Less than three per cent of all homes sold during New Zealand property market boom were “flipped” within six months of sale, new research by OneRoof shows.
Despite National and Labour politicians blaming “flippers” for pushing up house prices, and bringing in legislation to quash property speculation, data published in today’s OneRoof Property Report shows house-flipping in New Zealand was not as prevalent as popularly believed.
Of the 647,133 homes sold between 2013 and 2018, OneRoof and its data partner Valocity identified just 14,588 that were bought and then resold within a six-month period.
OneRoof editor Owen Vaughan says: “Multiple flipping of properties was also rare. Our research found that just 2480 homes were bought and resold three times or more during the boom.
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“The biggest group buying and reselling - 56 per cent - was single home-owners, while investors with three or more properties accounted for 44 per cent of resales.”
The research showed that, between 2013 and 2018, 25 per cent of residential sales (165,098) were bought and then resold within five years. The median holding period for residential homes in New Zealand since the year 2000 is 3.45 years.
According to the data, the “flip capital” of the country was not Auckland, but Wellington. Fourteen per cent of total resales in the capital between 2013 and 2018 were within six months. In Auckland, the figure was 12 per cent. Six-month flipping in Hamilton and Tauranga sat at the national average of 9 per cent.
Valocity valuation director James Wilson says the “flippers” in Wellington weren’t “big bad investors” but single-home owners moving up the property ladder. “Wellington house prices didn't start rising until late in the cycle, but buyers had been exposed to years of headlines about people leaving it too late and missing out,” he says.
“So when prices did move, people didn’t wait to move up next rung in the ladder. Unlike in Auckland, the leap to a bigger home wasn’t as large.”
Nationally, the average gain on resale properties was $155,000, but while this figure looks big, the housing market in general was experiencing rapid house price inflation, Wilson says.
In Auckland, where property values have risen 45 per cent since 2013, the difference between initial sale prices and the resale prices varied across the city, from 21 per cent in Franklin to 25 per cent in the Central City and 26 per cent in Waitakere.
In Hamilton the difference was 22 per cent, while in Tauranga it was 21 per cent. The difference dropped to 14 per cent in Christchurch, 12 per cent in Invercargill and 11 per cent in Gisborne.
Wilson says the data highlighted in the OneRoof Property Report contradicts the National Government’s reasoning for introducing in 2015 the bright line test – which taxed gain on non-family homes bought and sold within two years.
Then Finance Minister Bill English said at the time the taxation was aimed at speculators, particularly overseas speculators, and was intended to “take the heat out of the Auckland market”. In 2018, Labour extended the bright line test to five years, citing property speculation as the reason.
Wilson says the recent market slowdown was more to do with the Reserve Bank’s changes to loan-to-value ratios not the bright line test.
Former Property Institute of New Zealand CEO and OneRoof property commentator Ashley Church says the bright line test was unnecessary as professional resellers already pay tax on their gains and that investors are taxed on their rental income.
He says Labour’s statements on the bright line test showed they were confusing investors with speculators and exposed “their lack of understanding of the property market”.
“To label investors as ‘speculators’ is wrong,” he says. “Property investors provide an important and tangible public service [as landlords] yet the Government seems to be doing everything it can to get investors out of the market and discouraging others from entering it.”
Housing Minister Phil Twyford rejected the claims by Mr Church, saying the Government was not opposed to property investors. "New Zealand needs property investors who are in the market for stable long-term yields and are committed to providing high quality service to tenants.
"A number of our policy changes have been designed to prevent a repeat of the destructive speculative frenzy that saw house prices double and the worst homelessness in generations.
"Our Healthy Homes standards and more security of tenure support good landlords. We don’t want to see them undercut by those at the bottom end of the market who put a quick buck before the health and wellbeing of their tenants."
