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Pain & Gain in property- who’s winning and who’s not | October 2014

According to the latest RP Data Profit and Loss report, 91 per cent of all properties sold in the June quarter were for more than their owners had originally paid for them.

That was up from the previous quarter, when 90.3 per cent of sales were for a profit.

The average gross profit made on a sale was $225,000.realestaterises

About a third of all resales that were at a profit were for at least double their original purchase price.

As our property markets gain ground the number of properties selling for a loss has dropped with $14.4 billion worth of profits made in the residential market in the past quarter.

With home values rising at a national level and mortgage rates and arrears low RP Data expects that the proportion of loss-making re-sales is likely to continue to trend lower over the coming year.

In regional markets they expect coastal lifestyle markets to continue to slowly recover while resource centric areas may continue to see a rise in loss-making sales as commodity prices continue to fall along with mining employment.

Download the Pain & Gain report.

Pain

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Source: RPData

Report findings at a glance:

  • Resource and some lifestyle regions showing largest proportion of loss making re-sales
  • Queensland’s Mackay region recorded the largest proportion of loss making re-sales, with 34.8% of all June 2014 quarter resold homes transacting at a price lower than purchase price.
  • Capital cities and near capital city regions recorded low rates of loss-making re-sales, with Sydney recording the nation’s lowest proportion at just 2.7%.
  • 70,357 residential property re-sales nationally for the second quarter of the year
  • 9.0% recorded a gross loss from the original purchase price.
  • Gross value of the losses associated with these loss making re-sales totalled $398.3 million
  • 91% of all June 2014 quarter re-sales recorded a gross profit relative to their original purchase price. The gross profit from these re-sales equated to $14.4 billion.
  • 9.0% of all homes that resold over the second quarter of 2014 recorded a gross loss compared with original purchase price – down from 9.7% at the end of the first quarter of 2014 and much lower than the 11.5% recorded over the June 2013 quarter.
  • The gross value of losses on homes re-sold over the quarter was recorded at $398.3 million
  • The average gross loss per loss making transaction was $63,097.
  • 91% of all re-sales over the June quarter of 2013 transacted at a gross profit, with 30.5% of all re-sales at least doubling their money compared with their original purchase price.
  • Gross profit on re-sales was $14.4 billion
  • Average gross profit per profit making transaction was $225,830.

Download the Pain & Gain report.



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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


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