The housing market has sprung to life, with profits from house sales up for the first time in two years.
Around 93.3 per cent of sellers made a gross profit in the fourth quarter of last year, according to the latest CoreLogic figures.
It’s the first rise since the end of 2021, when it hit a peak of 99.3%.
However, the hold period to make those capital gains is 8.5 years, compared to seven years in 2020 and 2021.
The median gain has also risen for the first time in two years, increasing from $297,000 in quarter three of last year to $305,000 in the last quarter.
Auckland man Steven Pearce made a cash windfall when he sold his family home of “the best part of 60 years”.
With his mother needing rest home care, the family decided late last year to test out the market.
“Everything had sort of plateaued and started declining and we thought we were just not going to get anywhere near it,” Pearce told 1News.
“We thought it might be a bit of a risk doing it rather than holding on to it.”
The risk paid off, with the house proving popular.
“It took off and ended up being two parties were going head-to-head,” he said.
“So it went flying past reserve and we were just sitting a bit gobsmacked, actually.”
While the sale of Pearce’s family home netted him a $300,000 profit, CoreLogic chief property economist Kelvin Davidson said it’s “not always a cash windfall”.
“Hold period plays a big role here. If you’ve held a property for 10, 20, 30 years, of course you’re going to make a resale profit.”
It’s not the only market to pick back up, with residential building also returning to a more sustainable level where supply meets demand, according to the National Construction Pipeline report.
While some people are making losses, that too is falling.
“You tend to see the losses associated with shorter hold periods, so people who maybe intended to hold for 10 or 20 years but financial circumstances change, personal circumstances change, so they had to sell the property,” Davidson said.
“There are some losses that do tend to be associated with shorter hold periods but generally, the losses are much more limited than those gains at the moment.”
However, potential home sellers are being warned profits may be smaller than they once were.
“The property market in general as is going to be slow to recover,” Davidson said.