90.9% of all Australian residential property sales in the March quarter were profitable for the sellers.
Each quarter CoreLogic releases a Pain and Gain Report which is an analysis of homes which were resold at either a gross profit or gross loss.
And according to the latest report 90.9% of residential property sales received a higher price than what they were initially purchased for and just over 30% saw their prices double from the initial purchase price.
More losses in regional areas
It came as no surprise that capital city housing markets recorded a significantly lower proportion of loss-making sales compared to those seen in regional areas.
Only 6.2% of residential properties sold in capital cities were done so at a price lower than their buying price.
This compares to 14.6% of all sales that occurred in regional areas.
And again, not surprisingly, 24% of Melbourne’s inner city high rise sales occurred at a loss.
Some key findings
- Over the March 2015 quarter, 9.1% of all homes resold recorded a gross loss when compared to their previous purchase price. This figure was slightly higher than the 8.6% recorded at the end of 2014 but lower than the 9.6% over the same quarter last year.
- Although the proportion of loss-making resales rose, the figure has been fairly steady over the past 12 months. The total value of the loss-making resales over the quarter was $417 million with an average loss of $69,468.
- While 9.1% of resales were transacted at a loss, the vast majority (90.9%) of properties resold over the quarter did so at a profit. In fact, 30.7% of homes resold for more than double their previous purchase price.
- Across those homes which sold at a profit, the total value of this profit was recorded at $13.8 billion with the average gross profit recorded at $230,633.
- 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 6.0 years. Across all sales recording a gross profit the average length of ownership was recorded at 10.0 years, while homes which sold for more than double their previous purchase price were owned for an average of 16.8 years.
- Capital city housing markets continue to record a lower proportion of loss-making resales than regional areas of the country.
- Regional areas trends are shifting with the proportion of loss-making resales falling in areas linked to tourism and lifestyle.
- Housing markets linked to the resources sector are generally seeing an increase in loss-making resales as housing market conditions continue to deteriorate.
Proportion of total resales at a loss/gain, houses vs. units, March 2015 quarter