Units more likely to sell at a loss than houses | Pain & Gain Report

Across the nation, a higher proportion of houses are resold at a profit than units according to the latest Corelogic Pain & Gain Report.

This trend is also evident across the combined capital city and combined regional markets.

House And Units

In Melbourne, units were higher than 6.8 times more likely to resell at a loss than houses while in Brisbane units were 7.5 times as likely to resell for a loss as houses and in Canberra units were 12.3 times more likely to resell at a loss than houses.

Each individual capital city, except for Hobart, and all rest of state regions recorded a greater share of unit resales at a loss than houses.

For the capital cities, the proportion of houses reselling at a gross profit was lower over the quarter in all capital cities except for Darwin and Canberra.

For capital city units, the share of resales at a profit was lower over the quarter across each capital city.

For the regional housing markets, the proportion of houses reselling for a profit reduced over the quarter in all regional markets except WA.

For units, profit-making resales increased over the quarter in regional SA, regional WA and regional Tas with declines recorded elsewhere.

Proportion of total resales at a loss/gain, houses vs. units, March 2019 quarter

Houses Units
Region Pain Gain Pain Gain
Sydney 7.7% 92.3% 11.0% 89.0%
Regional NSW 5.1% 94.9% 7.7% 92.3%
Melbourne 2.5% 97.5% 17.0% 83.0%
Regional Vic 3.3% 96.7% 8.1% 91.9%
Brisbane 4.8% 95.2% 35.9% 64.1%
Regional Qld 14.9% 85.1% 25.4% 74.6%
Adelaide 6.4% 93.6% 17.0% 83.0%
Regional SA 16.3% 83.7% 21.4% 78.6%
Perth 28.8% 71.2% 49.2% 50.8%
Regional WA 37.3% 62.7% 47.4% 52.6%
Hobart 2.1% 97.9% 2.1% 97.9%
Regional Tas 4.0% 96.0% 7.0% 93.0%
Darwin 40.8% 59.2% 58.2% 41.8%
Regional NT 23.3% 76.7% 43.8% 56.3%
Australian Capital Territory 1.9% 98.1% 23.3% 76.7%
National 9.5% 90.5% 20.5% 79.5%
Cap city 8.9% 91.1% 21.4% 78.6%
Regional 10.2% 89.8% 18.5% 81.5%

Data from Corelogic’s Pain and Gain report shows that investors continue to be more likely to resell their properties at a loss compared to owner-occupiers.

Over the first quarter of 2019, 10.5% of properties that were owned by owner-occupiers resold at a loss compared to 16.7% of investment properties.

Across each of the major regions, investors were more likely to resell their properties at a loss than owner-occupiers.

Throughout the combined capital cities, 10.5% of owner-occupier properties that were resold over the first quarter of 2019 resold for a loss compared to 17.0% of investor-owned properties.

In Melbourne (3.5% vs 12.6%), Brisbane (7.3% vs 21.9%) and Canberra (3.9% vs 26.8%) investors were more than twice as likely to resell a property at a loss than owner-occupiers during the quarter.

In the remaining capital cities, the differential in share of loss-making resales between owner-occupiers and investors was fairly small with no difference recorded in Sydney.

Across the regional areas of the country, investors were more likely to resell a property for a loss (16.0%) than owner-occupiers (10.5%).

The gap between owner-occupied and investor-owned properties reselling at a loss was generally quite small.

Sale houses

The main exception was regional NT where investors were almost twice as likely to resell at a loss as owner-occupiers.

Clearly, any property owner will aim to make a profit from the sale of their property.

In a falling market, owner-occupiers may be more prepared to sell at a loss if they are purchasing their next home at an equivalent or greater discount.

Conversely, investors, because of taxation rules, would seemingly be more prepared to incur a loss because they (unlike owner occupiers) can offset those loses against future capital gains.

If home values fall, investors may be more inclined to sell at a loss and offset those losses which in turn could result in more supply becoming available for purchase at a time in which demand for housing remains below average due to weak conditions and tight credit.

Proportion of total resales at a loss/gain, owner-occupied vs. investors, March 2019 quarter

Region Owner Occupied Investor Owner Occupied Investor
Sydney 9.0% 9.0% 91.0% 91.0%
Regional NSW 5.4% 6.2% 94.6% 93.8%
Melbourne 3.5% 12.6% 96.5% 87.4%
Regional Vic 3.5% 5.0% 96.5% 95.0%
Brisbane 7.3% 21.9% 92.7% 78.1%
Regional Qld 15.4% 24.6% 84.6% 75.4%
Adelaide 6.8% 13.0% 93.2% 87.0%
Regional SA 16.1% 20.5% 83.9% 79.5%
Perth 30.5% 44.1% 69.5% 55.9%
Regional WA 36.8% 47.2% 63.2% 52.8%
Hobart 2.0% 2.4% 98.0% 97.6%
Regional Tas 3.8% 7.0% 96.2% 93.0%
Darwin 40.5% 53.1% 59.5% 46.9%
Regional NT 21.9% 40.0% 78.1% 60.0%
Australian Capital Territory 3.9% 26.8% 96.1% 73.2%
National 10.5% 16.7% 89.5% 83.3%
Cap city 10.5% 17.0% 89.5% 83.0%
Regional 10.5% 16.0% 89.5% 84.0%

Houses that sold for less than their previous purchase price over the March 2019 quarter were typically held by the owner for 6.1 years.

Units sold at a loss over the quarter were typically held by their owners for 6.3 years.

Conversely, houses sold for a profit had typically been held for 9.8 years and units 8.7 years.

Hand Holds Two Key Of The HouseThroughout the combined capital cities,  loss-making resales of houses had typically been held for 5.1 years compared to

5.5 years for loss-making resales of units.

Those capital city houses resold for a profit had typically been held for 10.2 years compared to 9.0 years for units.

Houses sold at a loss  in Sydney, Melbourne and to a lesser degree Hobart typically had a much shorter hold period than other capital cities while units resold at a loss in Sydney had a much shorter hold period than those in the other capital cities.

These trends reflect the much stronger value performances during the growth phase in each of these cities.

In terms of profit-making resales, the median hold periods for houses   were substantially longer in Darwin than they were elsewhere.

For units, Perth and Darwin once again had much longer median hold periods than elsewhere.

These trends towards a longer hold period in Perth and Darwin for profit–making resales reflects the ongoing weak housing market conditions of the past decade.

House Money CompareIn regional Australia, houses resold for a loss were typically held for 7.4 years compared to 9.3 years for those sold at a profit.

For regional unit markets, the average hold period for resales at a loss (9.0 years) was actually longer than for those resold at a profit (7.9 years).

For houses resold at a loss, the typical hold period was shortest in regional NSW and regional NT and longest in regional SA.

For loss-making unit resales hold periods were also shortest in regional NSW and regional NT and much longer in regional SA.

For houses reselling at a profit, typical hold periods were much greater than elsewhere in regional areas of WA.

For units selling at a profit, hold periods were longest in regional SA and regional NT.

Median hold period of resales at a loss/gain, houses vs. units, March 2019 quarter

Region Houses Units Houses Units
Sydney 2.8 3.2 10.2 8.3
Regional NSW 5.2 5.8 8.4 7.5
Melbourne 1.9 5.5 9.8 8.2
Regional Vic 5.5 7.9 8.8 8.5
Brisbane 4.4 6.2 10.0 11.5
Regional Qld 7.7 9.5 10.5 8.1
Adelaide 5.5 7.1 9.6 9.6
Regional SA 8.8 10.0 11.2 11.8
Perth 6.1 6.9 13.1 15.2
Regional WA 8.0 7.6 13.3 10.6
Hobart 3.8 6.1 9.7 8.0
Regional Tas 8.0 8.3 8.9 7.1
Darwin 5.6 7.6 12.7 15.0
Regional NT 4.9 5.6 10.8 12.5
Australian Capital Territory 6.4 7.1 10.2 8.0
National 6.1 6.3 9.8 8.7
Cap city 5.1 5.5 10.2 9.0
Regional 7.4 9.0 9.3 7.9

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Cameron Kusher


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

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