The latest Corelogic Pain & Gain Report shows who’s winning and losing when they resell their properties.
Across the nation, the majority of properties resold over the March 2019 quarter continued to transact at a profit.
However, 12.1% of resales were at a loss which was the highest share of resales at a loss since the March 2013 quarter.
Investors continue to be more likely to resell their properties at a loss compared to owner-occupiers.
The reduction in profit-making resales is a reflection of the declining dwelling values which are now being experienced at a national level.
Dwelling values are falling at a faster rate in the capital cities than they are in regional markets.
As a result, the share of profit-making resales across the combined capital cities (87.7%) is now lower than those across the combined regional markets (88.4%).
The 87.7% of resales at a profit throughout the combined capital cities is the lowest share since February 1999.
Such a low proportion of profit making resales highlights how the current housing market weakness across the capital cities is something not seen for many years.
Over the March quarter, 88.4% of resales across the combined non-capital city markets resold at a profit which was the lowest share since October 2016.
The last time the share of resales at a profit was greater across the combined regional markets than the combined capital cities was in early 2009.
Note that most of the strength in regional markets is being driven by areas close to capital cities such as Melbourne and Hobart, as well as some coastal markets.
Mining regions continue to record heightened levels of resales at a loss however, the share of resales at a loss in many of these regions is now starting to ease from extremely high levels.
Although the share of profit-making resales is easing, the majority of those selling properties are still realising a gross profit.
While losses are rising they remain in the overwhelming minority, at least at a national level.
Nationally, there was $14.319 billion worth of realised gross profits from resales over the March 2019 quarter.
The total value of these profits was significantly higher than the $586.8 million in realised gross losses from resales.
Although profits outweigh losses, the value of resale profits is trending lower as the value of resale losses trend higher.
Throughout the combined capital cities, the total value of resales at a profit was recorded at $10.156 billion.
Based on these figures the combined capital cities generated 70.9% of the total value of all profits over the quarter.
The capital cities accounting for the greatest share of capital city profits were: Sydney (34.3%) and Melbourne (33.1%) however, their share of gains are reducing.
By comparison, the total value of losses over the quarter across the capital cities was $378.3 million which indicates that capital cities generated 64.5% of the total value of losses nationally over the quarter.
The capital cities generating the greatest share of losses by value were: Perth (38.4%) and Sydney (30.8%).
Across the combined regional markets, the total value of realised profits from resales over the quarter was $4.163 billion.
The regions with the greatest share of these profits were: Regional NSW (38.8%) and Regional Qld (29.3%).
At the same time, the value of realised losses from resales was recorded at $208.5 million.
The regions with the greatest share of losses were: Regional Qld (42.6%) and Regional WA (30.7%).
The share of both houses and units reselling at a loss is climbing quite rapidly however, units continue to be much more likely to resell at a loss than houses.
Over the March 2019 quarter, 90.5% of resales of houses and 79.5% of resales of units were at a profit.
The share of houses resold for a profit was down from 91.7% the previous quarter and 92.9% a year earlier, it was also the lowest share of profit-making resales since September 2013.
Units are much more likely to resell at a loss with the 79.5% of profit making resales the lowest share since January 1999 and down from 82.1% the previous quarter and 85.4% a year earlier.
Across the combined capital cities the deterioration in housing market conditions over the past year has been more rapid than in the regional markets.
As at March 2019, 91.1% of all houses resold over the quarter were at a profit which was down from 92.5% the previous quarter and 94.4% a year earlier.
This proportion of capital city houses resold at a profit was the lowest it has been since February 2013.
For capital city units, 78.6% resold at a profit over the quarter with the share down from 81.8% the previous quarter and 85.7% a year earlier.
The 78.6% of units resold at a profit was slightly higher than the previous month, but prior to that, it was the lowest share since the 3 months to June 1997.
With housing market conditions continuing to weaken since March 2019, we would expect the share of capital city houses and units reselling for a loss to continue rising.
For the combined regional markets, 89.8% of houses resold at a profit over the March 2019 quarter and that figure was down from 90.1% the previous quarter and from 90.9% a year earlier. 81.5% of regional units resold at a loss over the quarter which was down from the previous quarter (83.0%) and down from 84.6% a year earlier.
The combined regional markets haven’t seen the same deterioration in market conditions that have been experienced in the capital cities however, we would expect the share of loss-making resales to continue to climb over the coming quarters.
Every capital city has seen an increase in the share of loss making resales over the March 2019 quarter relative to the December 2018 quarter.
It is a similar story over the past 12 months with Hobart the only capital city in which the share of resales at a loss is currently lower relative to the March 2018 quarter.
The share of properties resold at a loss over the first quarter of 2019 across individual capital cities was recorded at: 9.0% in Sydney, 6.4% in Melbourne, 11.5% in Brisbane, 8.4% in Adelaide, 32.8% in Perth, 2.1% in Hobart, 45.5% in Darwin and 10.2% in Canberra.
The share of resales at a loss in Melbourne is the highest since August 2014 and in Brisbane resale losses haven’t been this high since November 2013.
Adelaide’s share of resales at a loss hasn’t been this high since June 2016 and Perth resales at a loss haven’t been this high anytime throughout our records.
In the non-capital city markets, the proportion of resales at a loss was higher over the quarter in all areas except regional WA and regional Tas.
Over the year, the share of resales at a loss was higher in most states with regional Vic and regional Tas the exceptions.
As at the end of March 2019, the proportion of resales at a loss across the regional markets were recorded at: 5.5% in NSW, 3.8% in Vic, 17.8% in Qld, 16.6% in SA, 38.2% in WA, 4.3% in Tas and 27.0% in NT.
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