Australian houses are resold better than units | Pain and Gain Report

Across the nation, a higher proportion of houses are resold at a profit than units.

This trend is also evident across the combined capital city and combined regional markets.

House Units

In Melbourne, units were more than 4.5 times likely to resell at a loss than houses while in Brisbane units were 5.5 times as likely to resell for a loss as houses and in Canberra units were 7.4 times more likely to resell at a loss than houses.

Each individual capital city and rest of state region recorded a greater share of unit resales at a loss than houses.

For the capital cities, the proportion of houses reselling at a gross profit was lower over the quarter in all capital cities except for Hobart and Darwin.

For capital city units, the share of resales at a profit was lower over the quarter across each capital city except for Melbourne, Adelaide, Perth and Canberra.

For the regional housing markets, the proportion of houses reselling for a profit reduced over the quarter in all regional markets except WA.

For units, profit-making resales increased over the quarter in regional Vic, regional SA, regional Tas and regional NT with declines recorded elsewhere.

Proportion of total resales at a loss/gain, houses vs. units, June 2019 quarter

HousesUnits
RegionPainGainPainGain
Sydney8.9%91.1%14.0%86.0%
Regional NSW6.0%94.0%7.7%92.3%
Melbourne3.7%96.3%16.6%83.4%
Regional Vic3.6%96.4%5.8%94.5%
Brisbane6.6%93.4%36.4%63.6%
Regional Qld15.7%84.3%26.2%73.8%
Adelaide6.9%93.1%16.0%84.0%
Regional SA16.8%83.2%18.8%81.3%
Perth33.2%66.8%46.9%53.1%
Regional WA35.1%64.9%57.3%42.7%
Hobart1.6%98.4%2.3%97.7%
Regional Tas5.9%94.1%6.7%93.3%
Darwin39.8%60.2%65.6%34.4%
Regional NT23.9%76.1%33.3%66.7%
Australian Capital Territory2.7%97.3%20.0%80.0%
National10.3%89.7%20.4%79.6%
Cap city10.2%89.8%21.1%78.9%
Regional10.6%89.4%18.5%81.5%

Data shows that investors continue to be more likely to resell their properties at a loss compared to owner occupiers.

Over the second quarter of 2019, 11.3% of properties that were owned by owner occupiers resold at a loss compared to 17.4% of investment properties.

Workshop 2019
Across each of the major regions, except for regional Vic and regional Tas, a greater share of investors resold their properties at a loss than owner occupiers.

Throughout the combined capital cities, 11.5% of owner occupier properties that were resold over the second quarter of 2019 resold for a loss compared to 18.1% of investor owned properties.

In Melbourne (5.0% vs 13.5%), Brisbane (8.3% vs 24.3%) and Canberra (4.6% vs 21.0%) investors were more than twice as likely to resell a property at a loss than owner occupiers during the quarter.

In most of the remaining capital cities, the differential in share of loss-making resales between owner occupiers and investors was fairly small.

Across the regional areas of the country, investors were more likely to resell a property for a loss (15.8%) than owner occupiers (11.1%).

Selling A HouseThe gap between owner occupied and investor owned properties reselling at a loss was generally quite small.

Clearly, any property owner will aim to make a profit from the sale of their property. In a falling market owner occupiers may be more prepared to sell at a loss if they are purchasing their next home at an equivalent or greater discount.

Conversely, investors, because of taxation rules, would seemingly be more prepared to incur a loss because they (unlike owner occupiers) can offset those loses against future capital gains.

If home values fall, investors may be more inclined to sell at a loss and offset those losses which in turn could result in more supply becoming available for purchase at a time in which demand for housing remains below average due to recent weak conditions and tighter credit availability however, these trends have started to reverse over recent months.

Proportion of total resales at a loss/gain, owner occupied vs. investors, June 2019 quarter

PAINGAIN
RegionOwner OccupiedInvestorOwner OccupiedInvestor
Sydney10.6%11.7%89.4%88.3%
Regional NSW6.2%6.7%93.8%93.3%
Melbourne5.0%13.5%95.0%86.5%
Regional Vic3.9%3.6%96.1%96.4%
Brisbane8.3%24.3%91.7%75.7%
Regional Qld16.3%25.3%83.7%74.7%
Adelaide6.9%13.6%93.1%86.4%
Regional SA15.5%27.5%84.5%72.5%
Perth33.5%47.9%66.5%52.1%
Regional WA36.2%48.0%63.8%52.0%
Hobart1.7%2.2%98.3%97.8%
Regional Tas6.6%3.1%93.4%96.9%
Darwin38.0%62.4%62.0%37.6%
Regional NT25.4%28.6%74.6%71.4%
Australian Capital Territory4.6%21.0%95.4%79.0%
National11.3%17.4%88.7%82.6%
Cap city11.5%18.1%88.5%81.9%
Regional11.1%15.8%88.9%84.2%

Hold Periods

Houses that sold for less than their previous purchase price over the June 2019 quarter were typically held by the owner for 5.8 years.

Units sold at a loss over the quarter were typically held by their owners for 5.7 years.

panic-buy-or-sell-share-stock-gamble-risk-market-price-consumerConversely, houses sold for a profit had typically been held for 10.0 years and units 8.8 years.

Throughout the combined capital cities, loss-making resales of houses had typically been held for 4.6 years compared to 5.1 years for loss-making resales of units.

Those capital city houses resold for a profit had typically been held for 10.5 years compared to 9.1 years for units.

Houses sold at a loss in Sydney and Melbourne typically had a much shorter hold period than other capital cities.

For units sold at a loss, only those in Hobart and Canberra had a median hold period of less than a decade.

In terms of profit-making resales, the median hold periods for houses were longer in Darwin than they were elsewhere and the shortest in Sydney.

For units, Perth and Darwin once again had much longer median hold periods than elsewhere with Sydney, Melbourne and Hobart having the shortest hold periods.

The trend towards longer holding time in Perth and Darwin for profit–making resales reflects the ongoing weak housing market conditions of the past decade.

In regional Australia, houses resold for a loss were typically held for 7.6 years compared to 9.3 years for those sold at a profit.

Hand Holds Two Key Of The HouseFor regional unit markets, the average hold period for resales at a loss (9.2 years) was actually longer than for those resold at a profit (7.5 years).

For houses resold at a loss, the typical hold period was shortest in regional NSW and regional Vic and longest in regional SA.

For loss-making unit resales hold periods were shortest in regional NSW and regional Vic and longest in regional WA.

For houses reselling at a profit, typical hold periods were much greater than elsewhere in regional areas of SA and Qld.

For units selling at a profit, hold periods were longest in regional SA and regional WA.

Median hold period of resales at a loss/gain, houses vs. units, June 2019 quarter

PAINGAIN
RegionHousesUnitsHousesUnits
Sydney2.710.33.38.5
Regional NSW4.68.56.47.2
Melbourne2.010.45.58.7
Regional Vic5.48.75.37.4
Brisbane4.010.15.611.7
Regional Qld8.010.19.87.6
Adelaide4.510.16.79.7
Regional SA8.711.09.812.2
Perth6.213.27.214.9
Regional WA8.413.38.614.9
Hobart4.48.81.38.6
Regional Tas8.39.64.87.5
Darwin6.512.27.813.6
Regional NT5.98.79.07.3
Australian Capital Territory2.69.96.79.4
National5.85.710.08.8
Cap city4.65.110.59.1
Regional7.69.29.37.5

Workshop 2019 small

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Tim Lawless

About

Tim heads up the Core Logic RP Data research and analytics team, analysing real estate markets, demographics and economic trends across Australia. Visit www.corelogic.com.au


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