Landlords take profit by selling properties

Landlords are making profits of about $300,000 each time they sell a property – but there is 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.

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 amedian $282,000 per sale compared with $270,000 for owner-occupiers.

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, it is the heat of the market. Everyone is a winner, whether you are an investor or an owner-occupier, whatever sort of property and wherever you own.’’

Davidson said that 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. That is the difference.’’

But Davidson said it felt like things would change in the second half of this year. It was looking increasingly likely there would be restrictions put on investors’ interest-only lending, he said.

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 Party’s suggestion that investors be required to have cash as part of their deposit, not just equity in other properties.