CoreLogic Pain and Gain Report | Houses vs Units

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

This trend is also replicated across the combined capital city and combined regional markets. Wa And Qd

Sydney is the only region in which a greater proportion of units resold for a profit over the quarter than houses although Hobart had an equivalent share for houses and units.

In Melbourne, units were almost 10 times more likely to resell at a loss than houses while in Brisbane units were almost 9 times as likely to resell for a loss than houses and in Canberra units were 7.4 times more likely to resell at a loss than houses.

For the capital cities, the proportion of houses reselling at a gross profit was higher over the quarter in Brisbane, Adelaide and Darwin but lower elsewhere.

For units, there was a higher proportion of resales at a profit over the quarter in Sydney, Melbourne, Adelaide, Hobart and Canberra.

For the regional housing markets, the proportion of houses reselling for a profit increased over the quarter in Regional NSW, Regional Vic, Regional WA and Regional Tas.

For units, profit-making resales increased over the quarter in all regions except for Regional NT.

Proportion of total resales at a loss/gain, houses vs. units, Dec 2017 quarter.

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Suburbs with the highest share of resales at a loss

The tables below highlight the suburbs across the country that have experienced the highest proportion of loss-making resales over the December 2017 quarter. 

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The list shows the Top 20 for houses and units and only includes those suburbs that had at least 10 resales of properties over the quarter.

Both the list for houses and units has a strong slant towards regions of Qld and WA.

This is reflective of the ongoing weak housing conditions in these two states over recent years.

Pegs Creek, a suburb of Karratha in regional WA had the highest proportion of resales at a loss throughout the December 2017 quarter.

Of the 13 properties resold over the quarter, 92.3% of the sales were at a price below the previous purchase price.

Yeppoon, located in coastal Central Queensland, had the highest proportion of unit resales at a loss over the quarter.

Of the 10 resales, 8 were at a price below the previous purchase price. 60 Per Cent Sales At A Loss

Each of the 20 suburbs with the highest proportion of houses resold at a loss recorded at least 60% of sales at a loss.

The Top 20 list also has a particularly strong slant towards suburbs linked to the mining and resources sector in Qld and WA.

Of the 20 suburbs listed, 10 are located in WA, nine are situated in Qld and one is located in SA.

The list for suburbs for units with the highest proportion of resales at a loss is somewhat different to the list for houses.

Although Qld and WA still dominate the list, it is more slanted towards suburbs within capital city and major regional areas.

This is reflective of large volumes of new unit supply in recent years and the underperformance of the units sector as supply has ramped-up.

Of the top 20 list, 12 suburbs are located in Qld (4 in Brisbane), six in WA (all in Perth) and one each in Vic and ACT.

Highest Proportion of total resales at a loss, over the December 2017 quarter, houses (LHS) and units (RHS).

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Investor vs Owner Occupier Resales

Investors continued to be more likely to resell their properties at a loss than owner occupiers during the final quarter of 2017. Brisbanecbd

Over the quarter, 7.5% of owner occupied properties sold at a loss compared to the 11.3% of investor owned properties.

Sydney was the only major region of the country in which a higher proportion of investors resold their property at a loss than owner occupiers.

93.9% of capital city properties resold by owner occupiers transacted at a profit over the December 2017 quarter compared to 90.7% of investor owned properties.

Throughout all capital cities the gap in profit making-resales between owner occupiers and investors was not that large however, across individual cities the results were much more varied.

Melbourne investors were 4 times as likely to resell a property at a loss than an owner occupier, in Brisbane investors were 2.6 times as likely to sell at a loss and in Canberra they were 5.2 times as likely to sell for a loss.

Across the regional areas of the country, investors were much more likely to resell a property for a loss (15.3%) than owner occupiers (9.8%). Sell Buy

While in each region owner occupiers were more likely than investors to resell for a profit, the gap between the two vendor type performances was nowhere near as great in regional areas as what was recorded in some capital city markets.

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.

Meanwhile, 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 (which have been increasingly active in the housing market) may be more inclined to sell at a loss and offset those losses which in turn could result in much more supply becoming available for purchase at a time in which demand for housing falls because values are declining.

Median hold period of resales at a loss/gain, houses vs. units, Dec 2017 quarter.

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You may also be interested in reading:

CORELOGIC PAIN AND GAIN REPORT | NATIONAL OVERVIEW



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About

Cameron Kusher is Corelogic RP Data’s senior research analyst. Cameron has a thorough understanding of the fundamentals such as demographics, trends & economics. Visit www.corelogic.com.au


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