CoreLogic Pain and Gain Report | National overview

91.1% of properties that were resold over the final quarter of 2017 transacted at the same or a higher price than what they were purchased for. 

Clearly this figure shows that the vast majority of vendors selling homes are making a profit.Capital Cities Market

The 91.1% of properties resold at a profit was up from 90.9% at the end of the previous quarter but slightly lower than the 91.3% resold at a profit over the same quarter in 2016.

Capital city properties that are being resold remain more likely to sell for a profit than those in regional markets.

It should be noted though that the proportion of resales at a profit across regional markets continues to rise while the proportion of resales at a profit in capital city markets has been relatively unchanged over recent quarters.

Over the December 2017 quarter, 92.7% of capital city properties resold for a profit compared to 88.4% of regional properties. 

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The proportion of profit-making resales across the capital cities was unchanged from the previous quarter but lower than the 93.5% of resales a year earlier.

Across the combined non-capital city markets, the 88.4% of resales at a profit increased from 88.0% the previous quarter and was up from 87.3% a year earlier.

The trend towards fewer sales at a loss across regional market reflects the fact that the most recent data shows that dwelling values in regional markets continue to rise as capital city values drift lower.

Note that most of the strength in regional markets is being driven by areas close to capital cities such as Sydney, Melbourne and Brisbane, as well as some coastal markets, while mining regions continue to record heightened levels of resales at a loss.

A1

With more than 90% of properties selling for a price at or in excess of their previous purchase price, the realised profits from resales substantially outweighed the value of realised losses over the quarter.

Nationally, there was $17.832 billion worth of realised gross profits from resales over the December 2017 quarter.Property Profit

The total value of these profits was substantially higher than the $442.0 million in realised gross losses from resales.

Of course, this is by virtue of the fact that only 8.9% of all resales were at a loss over the quarter.

Throughout the combined capital cities, the total value of resales at a profit was recorded at $14.249 billion.

Based on these figures the combined capital cities generated 79.9% of the total value of all profits over the quarter.

By comparison, the total value of losses over the quarter was $225.8 million which indicates that capital cities generated 51.1% of the total value of losses nationally over the quarter.

Across the combined regional markets, the total value of realised profits from resales over the quarter was $3.584 billion.

At the same time, the value of realised losses from resales was recorded at $213.1 million.

According to the accompanying chart, when looking at resales of houses and units, houses have consistently recorded a higher proportion of resales at a profit than units. For Sale

This can be linked to a number factors such as: Australians generally having a preference for detached housing as opposed to attached, a house typically has a greater underlying land value than a unit which is what the overall value is largely derived from and unit markets can be more prone to oversupplies than houses markets.

Across the nation, 92.3% of all houses resold over the quarter transacted at the same or a higher price than that which they were purchased for compared to 88.2% of units.

The proportion of profit-making house sales was unchanged compared to the previous quarter but down from 92.8% the same quarter in 2016.

For units, the 88.2% of profit-making resales was up from 87.7% at the end of the previous quarter and higher than the 87.5% a year earlier.

Throughout the combined capital city housing markets, 94.2% of houses and 89.5% of units resold for a profit over the final quarter of 2017. Sydney suburbs

For houses, the proportion of profit-making resales was marginally lower over the quarter (94.3%) as well as being lower than a year earlier (95.1%).

The 89.5% of capital city units resold at a loss over the quarter was slightly higher than the 89.3% the previous quarter but was lower than the 89.9% a year previous.

Across the combined regional markets, the proportion of resales at a profit for units (85.1%) remains lower than houses (89.3%).

Resales at a profit for houses were unchanged from the previous quarter while for units they had increased from 84.0%.

The proportion of regional houses reselling for a profit in the final quarter of 2017 was higher than the 89.0% over the final quarter of 2016 while for units the proportion was also higher than the 81.7% at the end of 2016.

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The instances of loss-making resales fell over the December 2017 quarter relative to the September 2017 quarter in Melbourne, Brisbane, Adelaide, Darwin and Canberra but rose elsewhere.

When comparing to a year earlier, there were fewer resales at a loss in Melbourne, Hobart and Canberra with all other capital cities having recorded an increase.

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Over the final quarter of 2017, the proportion of resales at a loss across each capital city was recorded at: 2.0% in Sydney, 3.1% in Melbourne, 8.4% in Brisbane, 7.7% in Adelaide, 27.1% in Perth, 2.9% in Hobart, 32.1% in Darwin and 5.6% in Canberra.

In Melbourne, the proportion of resales at a loss was the lowest since the three months to June 2011 over the quarter.  Units Vs Houses

By contrast, the proportion of resales at a loss in Perth was the highest it’s been on record.

In the non-capital city markets, the proportion of resales at a loss was lower over the quarter in regional areas of NSW, Vic, WA and Tas but higher elsewhere.

Over the year, the proportion of resales at a loss was higher in regional areas of SA, WA and NT but lower elsewhere.

As at the end of 2017, the proportion of resales at a loss across the regional markets were recorded at: 4.7% in NSW, 5.6% in Vic, 17.8% in Qld, 22.6% in SA, 37.5% in WA, 12.9% in Tas and 27.7% in NT.

The share of resales at a loss in regional NSW was the lowest it has been since August 2005 and in regional Vic it was the lowest it’s been since July 2011.

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You may also be interested in reading:

PROPERTY RESALES CONTINUE TO SHOW PROFIT DESPITE SLOWER CONDITIONS



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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


'CoreLogic Pain and Gain Report | National overview' have 2 comments

  1. Avatar for Property Update

    March 23, 2018 @ 3:36 pm Tim

    “Clearly this shows that the vast majority of vendors selling homes are making a profit”

    Clearly this is not clear. The figures do not account for buying and selling costs. The break-even figures reported are actually a loss and many of the reported ‘profits’ are actually losses or break evens for the vendor.

    Reply

    • Avatar for Property Update

      March 23, 2018 @ 10:23 pm Michael Yardney

      Tim, of course you are right – property investment may sound simple, but it’s not easy

      Reply


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