Property 'Flipping' Less Prominent Now

Property ‘flipping' has lost its popularity in New Zealand in the past two years, as the housing market flattens and people see less opportunities to make money from buying and quickly selling houses. Nick Goodall, research head at property information company CoreLogic NZ, has published data that shows property flipping has almost halved from 2015-2017.

In 2017, more than 2100 residential properties across the country were held for less than 12 months before being sold for profit. In 2016 it was almost 4000 such sales, and more than 4100 in 2015. Goodall defines property ‘flipping ‘as selling twice within a year for a profit and said there are two main reasons for the decline in flipping activity.

"The reduction could be in part be due to the introduction of the Bright Line Test which has been in place for over two years now, and will reduce the overall profitability of short term sales, having to pay tax on any profits. And of course the reduction also reflects the slowdown in value growth over 2017.”

In 2015, the previous Government introduced the Bright Line Test, which means that in most cases tax must be paid on profits made from selling a residential property within two years of purchase. The current Government has announced an extension, so the tax will apply to properties bought and sold within five years.

HomeLegal offers conveyancing services in Wellington to protect home buyers and sellers. These real estate lawyers help first home buyers and others looking for assistance in the property market. If you are unsure about how property ‘flipping’ works or you have any other queries regarding buying or selling a house, contact HomeLegal.