Property sellers continue to reap profits despite weaker capital city markets | Pain and Gain Report: national overview

Almost nine in 10 properties (87.1 per cent) resold in the June quarter made a profit for the seller, according to CoreLogic’s latest Pain and Gain Report (www.corelogic.com.au/paingain), which provides a view of how resold properties are performing across Australia.

Sell Sold PropertyNationally, 89.7 per cent of houses resold for higher than their original purchase price, compared to 79.6 per cent of apartments.

The resales delivered a combined gross profit of $16.3 billion nationally, with sellers in Sydney and Melbourne enjoying the vast majority of the gains (27.0 per cent and 26.4 per cent respectively).

The report also showed a slight increase in properties that sold at a loss across Australia year on year.

In the three months to June 2019, 12.9 per cent of resales nationally were below the previous purchase price, which was the highest share since June 1999.

This compares to 9.3 per cent in June 2018 and 12.1 per cent in the March 2019 quarter.

Despite a downward trend nationally, the vast majority of home owners continue to resell their properties for a profit, highlighting the longer term positive trend in market conditions

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Over the three months to June 2019, owner-occupiers were more likely than investors to realise a profit from selling their property.

This trend was evident across the combined capitals, but particularly in Melbourne, Brisbane and Canberra, where investors were more than twice as likely to sell at a loss compared to owner-occupiers.

For the first time since early 2009, regional markets slightly outperformed the capital city markets, with 87.9 per cent of regional sales profitable compared to 86.6 per cent in the cities.

Coastal regions and areas close to the capital cities are stronger over the second quarter, while sellers in the major mining areas may still be finding it challenging to generate a profit. Around half of all properties sold in the North and South Outback areas of WA generated a loss for the seller over the June quarter.

Across the capital cities, the greatest gain was to be found in Hobart, where 98.2 per cent of properties sold at a profit.

The greatest pain was felt in Darwin, where 48.2 per cent of properties sold at a loss, and Perth, which recorded a loss for 36.1 per cent of all property resales.

Key findings – national

  • In the June 2019 quarter, 87.1 per cent of properties across Australia resold for a profit, a decline of 3.6 per cent year on year.
  • 89.7 per cent of houses resold at a profit compared to 79.6 per cent of units across both the combined capital city and regional markets.
  • australia-map-property-market-house-home-build-state-country-flagThe highest percentages of profitable house resales were to be found in Hobart (98.4 per cent) and the ACT (97.3 per cent). Hobart also recorded the biggest gains for apartments, with 97.7 per of all resales delivering a profit. The next most profitable areas for apartment resellers were in regional Victoria (94.5 per cent) and regional Tasmania (93.3 per cent).
  • House sellers in Darwin realised the greatest losses with 39.8 per cent sold at a loss. This was followed by 35.1 per cent of sales in regional WA and 33.2 per cent of sales in Perth. Apartment resales mirrored this trend with losses realised for 65.6 per cent of resales in Darwin, 57.3 per cent of resales in regional WA and 46.9 per cent of resales in Perth.
  • Investors had a greater likelihood of reselling their properties at a loss compared to owneroccupiers, with 11.3 per cent of owner-occupied properties resold at a loss compared to 17.4 per cent of investment properties.
  • For investors, the highest pain was in Darwin where 62.4 per cent of their properties sold for less than the purchase price compared to only 38 per cent of owner-occupied properties.
  • Owner-occupied properties experienced greater losses than investment properties in only two areas: in regional Tasmania, where 6.6 per cent of owner-occupied properties sold at a loss compared to 3.1 per cent of investment properties; and in regional Victoria, where 3.9 per cent of owner-occupied properties sold for a loss compared to 3.6 per cent of investorowned properties.
  • Houses that sold for a profit were typically held for 10.0 years and units 8.8 years. House owners that sold at a loss typically held their property for 5.8 years. Units that sold at a loss were generally held for a similar period of 5.7 years.

Key findings – regional

  • Buy Home In AustraliaThe major mining regions with the highest percentages of loss making re-sales were Outback (North) WA (50.6 per cent), Outback (South) WA (46.7 per cent) and Townsville (41.9 per cent).
  • Across the coastal areas, resale losses were the greatest in Bunbury (30.3 per cent) and Cairns (24.8 per cent). The greatest gains were to be found in Geelong, where 98.3 per cent of properties resold for a profit.
  • Across the non-coastal regions, the proportion of resales at a loss was highest in Toowoomba at 14.2 per cent and New England and North West at 14.0 per cent. The greatest gains were in Ballarat where 98.5 per cent of properties resold for a profit.

Sydney

  • In Sydney, 89 per cent of properties resold for a profit and 11 per cent resold for a loss over
    the June quarter.
  • The total value of resales at a profit was $4.404 billion (24.6 per cent of combined profits nationally) and the total value of resales at a loss was $178.7 million (27.0 per cent of combined losses nationally).
  • The most profitable area in Sydney for resales was The Hawkesbury, where 94.5 per cent of properties sold for more than their original purchase price. This was followed by 94.1 per
    cent in The Hills Shire and 93.9 per cent in Randwick.
  • The greatest share of resales at a loss occurred in Strathfield (22.8 per cent), Botany Bay (21.4 per cent) and Fairfield (20.1 per cent).

Melbourne

  • MelbourneOver the June quarter, 92.3 per cent of Melbourne properties sold for more than their purchase price. This generated $4.316 billion of profits, which comprises 26.4 per cent of
    total resale profits nationally.
  • The greatest gains were in Macedon Ranges and Moorabool, where no resales were reported at a loss.
  • Melbourne had the highest proportion of resales at a loss, with 35.6 per cent of properties selling for less than their purchase price. In Stonnington, almost a quarter of resales (24.5 per cent) were at a loss.

Brisbane

  • Over the June quarter, 87.0 per cent of Brisbane properties resold at a profit, delivering $1.341 billion of total profit and $37.7 million of losses. This equated to 8.2 per cent of the total value of resale profits nationally and 5.2 per cent of the losses.
  • The greatest gains were recorded in Redland and Lockyer Valley, where 90.7 per cent and 89.6 per cent of properties sold for a profit, respectively.
  • Losses were most common in Scenic Rim, where 19.3 per cent of properties resold for less than their purchase price.

Adelaide

  • AdelaideIn Adelaide, 91.3 per cent of properties resold for a profit over the June quarter, generating $693.1 million in profits (4.2 per cent of all resale profits nationally). Losses totalled $14.7 million, which equates to 2.0 per cent of all resale losses.
  • The greatest gain was in Mallala, which reported 100 per cent of resales at a proft. Burnside and Mitchum also delivered a high percentage of profit making sales, at 96.6 per cent and 96.5 per cent respectively.
  • Playford and Gawler recorded the highest losses, with 21.0 per cent and 18.6 per cent of properties selling for less than they previously sold for.

Perth

  • Over the June 2019 quarter, 63.9 per cent of properties in Perth sold for a profit. This generated $834.9 million and accounted for 5.1 per cent of resale profits nationally. Conversely, Perth recorded $166.5 million in loss making resales equating to 23.0 per cent of national losses.
  • Gains were greatest in Peppermint Grove, which recorded no resales at a loss over the quarter, and Nedlands with 78.6 per cent or resales delivering a profit for the seller.
  • The highest share of resale losses were in Perth (55.4 per cent), Bayswater (47.8 per cent) and Belmont (45.3 per cent).

Hobart

  • Hobart PropertyIn Hobart, 98.2 per cent of properties resold for a profit. Hobart resales of properties over the June 2019 quarter generated $185.0 million in profits (1.1 per cent of all profits nationally) and $1.6 million in losses (0.2 per cent of national losses).
  • Sellers had the greatest chance of making a profit in Sorell, which recorded no resales at a loss over the quarter. Results were also strong in Hobart, where 99.3 per cent of resales delivered a profit and Kingborough where 99.1 per cent of resales were profitable.
  • Brighton reported 5.2 per cent of resales at a loss, the highest over the quarter.

Darwin

  • Over the June 2019 quarter, 51.8 per cent of properties in Dawin sold for a profit. Resales generated $25.7 million in profits, which comprises 0.2 per cent of national profit, and $15.6 million in losses, equating to 2.1 per cent of national losses.
  • Litchfield recorded the greatest gains with 79.3 per cent of property resales profitable. Darwin and Litchfield reported 51.7 per cent and 50.0 per cent of resold properties made a loss over the quarter.

Canberra

  • In Canberra, 91.0 per cent of properties sold for more than their original purchase price over the second quarter of 2019.
  • Canberra recorded $269.5 million in profits, which accounted for 1.6 per cent of profits nationally, and $9.9 million of resales at a loss, equating to 1.4 per cent of national losses.

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Tim Lawless

About

Tim heads up the Core Logic RP Data research and analytics team, analysing real estate markets, demographics and economic trends across Australia. Visit www.corelogic.com.au


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