CoreLogic RP Data’s Pain and Gain Report for the June 2015 quarter shows that 9.1% of all homes resold recorded a gross loss when compared to their previous purchase price. However, vast majority (90.9%) of properties resold over the quarter did so at a profit. In fact, 30.8% of homes resold for more than double their previous purchase price.
The vast majority (90.9%) of properties resold over the quarter did so at a profit. In fact, 30.8% of homes resold for more than double their previous purchase price. Across those homes which resold at a profit, the total value of this profit was recorded at $16.1 billion with the average gross profit recorded at $259,174.
Those recording a loss over the March 2015 quarter was (8.9%) and slightly higher than the 8.6% recorded over the June 2014 quarter. Although the proportion of loss-making resales rose, the figure has been fairly steady over the past 12 months. Across those dwellings which resold at a loss over the quarter, the total value of loss was $411.3 million with an average loss of $65,585.
The data also highlights the fact that ownership of property, whether for investment or owner occupier purposes, should be seen as a long-term investment. Across the country, those homes that resold at a loss had an average length of ownership of 5.3 years. Across all sales recording a gross profit the average length of ownership was recorded at 9.9 years, while homes which sold for more than double their previous purchase price were owned for an average of 16.4 years.
Sydney remains the only capital city housing market in which units had a lower proportion of resales at a loss (1.8%) than houses (2.2%) over the quarter. The differential in loss-making resales between houses and units was quite substantial across most capital cities and reflects the fact that house values tend to increase at a more rapid pace than units.
Trends across some of the major regions of the country which are intrinsically linked with the resources sector have been analysed and in most instances a heightened level of loss-making sales is evident as the mining investment boom slows. Over the June 2015 quarter, 47.6% of resold properties in Mackay sold at a loss. Across the other regions analysed the figures were recorded at: 35.6% in Fitzroy, 10.9% in the Hunter Valley (excluding Newcastle), 19.3% in Outback SA and 32.6% in Outback WA.
