Properties in “lifestyle markets” are more likely to be resold at a loss, according to a new report from RP Data.
The Pain and Gain report found a total of 69,390 residential properties were resold nationwide in the June 2013 quarter. Twelve per cent of these sales resulted in a gross loss.
Most of these losses occurred in lifestyle markets, such as Queensland’s Gold Coast. In this region, 35.3 per cent of all resales in the quarter were for less than the original purchase price.
The strongest resale conditions were in resource-driven regional areas and agricultural areas such as Queensland’s Central West, Perth and Victoria’s Barwon and the Central Highlands. Less than six per cent of sellers in these zones suffered a gross loss.
The report also found that properties held for less than five years were more likely to be resold at a loss than properties held over the long term.
“This highlights the long-term nature of investment in residential property and that if you chase short-term profits you are likely to be more susceptible to losses,” research analyst Cameron Kusher said.
Properties sold at a loss in the June 2013 quarter were held, on average, for five years, according to the report.
Meanwhile, only 7.2 per cent of homes purchased prior to 1 January 2007 sold at a loss during the June quarter.
“However, for homes purchased on or after this date, the propensity to make a loss on the sale climbed substantially,” Mr Kusher said.