Where are property buyers making a profit and where are they making a loss?
The latest CoreLogic Pain & Gain report uncovers the profits earned and the losses made from property sales over the June 2016 quarter, and reveals which locations have been the most valuable for investment.
Based on the June quarter findings, 5.9% of capital city houses resold at a loss, up from 5.7% from the March 2016 quarter while units at 9.5% resold for less than the previous purchase price.
Across regional housing markets, 12.2% of houses & 19.9% of units resold over the June 2016 quarter transacted below previous purchase price.
Regional areas experienced the highest proportion of total resales at a loss since the three months to August 2015 for houses and the three months to February 2016 for units.
JUNE QUARTER KEY FINDINGS:
Capital Cities Losses & Profits:
• $164,239,771 in losses from resales of capital city houses = $94,926 on average;
• $87,017,927 in losses from resales of capital city units = $67,456 on average;
• $9,953,211,125 realised for resale profit for capital city houses = $363,442 on average;
• Total resale profit for capital city units – $2,828,164,261 = $229,596 on average.
Regional Areas Losses & Profits:
• $139,475,875 worth of house resold at a loss = $64,423 average loss
• $68,199,797 units resold at a loss = $61,944 average loss
• $2,400,837,922 in profits realised for houses = $154,773 on average
• $475,731,130 in profit realised for units across regional areas = $107,680 on average.
While loss-making resales increased over the quarter, historically, most cities are still seeing quite a low instance of homes reselling at a loss.
However, Perth and Darwin are the exceptions with the proportion of loss-making resales at, or close to historic highs.
Around the country, the proportion of loss-making resales over the quarter increased across each capital city excluding Melbourne and Canberra.
Over the period, 20.1 per cent of Perth homes resold at a loss, while in Darwin, 24.2 per cent of homes resold at a loss; the highest proportion since December 2002.
Across the remaining capitals, the proportion of loss-making resales was: Sydney 2.4%, Melbourne 4.4%, Brisbane 8.4%, Adelaide 10.6%, Hobart 10.8% and Canberra 9.6%.
Across the regional markets, the proportion of loss-making resales increase in New South Wales, Victoria, Queensland and Western Australia, and is unchanged in South Australia.
Across the individual areas, the proportion of resales at a loss were recorded at: 7.3% in regional NSW, 9.3% in regional Vic, 19.8% in regional Qld, 21.7% in regional SA, 33.8% in regional WA, 19.6% in regional Tas and 21.2% in regional NT.
Sydney was the only capital city or regional market which had a lower proportion of units reselling at a loss compared to houses.
In most regions the differential between the proportion of loss-making resales of houses and units was significant.
In Melbourne, Brisbane and the Australian Capital Territory, the proportion of unit resales at a loss over the quarter was more than double that of houses.
Houses have typically recorded a superior rate of capital growth to that of units and those houses reselling at a profit tend to record a much greater profit than units.
These factors go some way to explaining why units are recording a much higher proportion of loss-making resales than houses.
Another point to consider is ownership – units rather than houses are more likely to be owned by investors.
The ability to offset losses on investment properties against future capital gain is likely to provide investors with much more of an incentive to sell at a loss than owner occupiers.