Top 5 loss-making investment locations revealed

By Staff Reporter
Investment losses

The regions where sellers have encountered the biggest losses have been uncovered in a new report.

CoreLogic RP Data’s Pain & Gain report for the March 2015 quarter reveals which locations across the country recorded the greatest proportion of gross losses in resales when compared with the original purchase price.

Over the March 2015 quarter, 9.1 per cent of all home resales transacted at a gross loss, up slightly from 8.6 per cent over the December 2014 quarter – but lower than the 9.6 per cent recorded over the corresponding quarter a year ago.

The total value of these loss-making resales over the quarter was $416.6 million and the average loss was $69,468, according to CoreLogic RP Data.

The top five locations with loss-making resales, according to the report, were:
1. Mackay (Qld) 45.5%
2. Townsville (Qld) 30.7%
3. Wide Bay (Qld) 28.3%
4. Fitzroy (Qld) 26.5%
5. Outback (WA) 23.9%

CoreLogic RP Data said those areas intrinsically linked to the resources sector had taken a hit in recent years.

“Over the March 2015 quarter, a record high 45.5 per cent of resold properties in Mackay sold at a loss,” the report said. “Across the other regions analysed, the figures were recorded at: 26.5 per cent in Fitzroy, 9.3 per cent in the Hunter Valley (excluding Newcastle), 13.2 per cent in Outback SA and 23.9 per cent in Outback WA. The Hunter Valley is probably the one outlier here however, its economy is a little more diversified than the other mining regions we have analysed.

“To put the rapid change in conditions into perspective, two years ago the proportion of loss-making resales were recorded at: 10.0 per cent in Fitzroy, 10.5 per cent in Hunter Valley (excluding Newcastle), 14.4 per cent in Mackay, 12.3 per cent in Outback SA and 11.8 per cent in Outback WA. Outback SA has actually recorded a slight decline in loss-making resales over the past two years.

“The slowdown in resource investment and falling commodity prices is having a big impact on housing markets in these markets. This is despite the fact that many of these regions experienced a significant boom in home values as commodity prices and investment in the mining sector surged over recent years.”

The report shows that regional Western Australia suffered the highest proportion of loss-making resales for both units (32.4 per cent of all sales) and houses (20.0%). Regional Queensland was in second position for units – with 29.3 per cent selling for a loss.

The top five loss-making regions for houses over the quarter are as follows:
1. Regional WA 20.0%
2. Regional Tasmania 19.1%
3. Regional SA 16.2%
4. Regional Queensland 15.6%
5. Regional NT: 12.3%

The top five loss-making regions for units were:
1. Regional WA 32.4%
2. Regional Queensland 29.3%
3. Regional Tasmania 25.0%
4. Regional SA 24.1%
5. Regional NT 21.9%

Investors were most likely to make a loss in the Northern Territory regions, with 28.6 of investors who resold over the period making a loss (compared with just 11.8 per cent of owner occupiers). Investors in regional Queensland also took a hit, with 28.0 per cent of resales resulting in a loss (compared with 17.4 per cent for owner occupiers in the same area).

The Sydney region recorded the lowest proportion of loss-making resales, with just 2.4 per cent, followed by the Illawarra with 2.5 per cent and Toowoomba in Queensland with 2.7 per cent.

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