With property sale profits reaching $15.683 billion this quarter and 10.2 per cent of properties reselling for under their previous purchase price, you might be surprised to see that this result has been lowest since October 2013.
Detailed in the latest CoreLogic Pain & Gain Report, the 89.8 per cent of properties resold at a profit over the June quarter was down compared to last quarter of 90.1 per cent, as well as the same quarter last year at 91.1 per cent.
Most of the $15.683 billion profit was attributed to Sydney and Melbourne resales, which accounted for 32 per cent and 27.4 per cent of all resale profits, respectively, while also accounting for 11.2 per cent and 7.9 per cent of all resale losses.
“When looking at the regions which have recorded the lowest proportion of resales at a loss, the data is now showing that some of the regions surrounding Sydney and Melbourne are recording even fewer resales at a loss than the capital cities,” the report noted.
Meanwhile, the regions responsible for the highest level of resale losses wereand regional Queensland at 23.4 per cent and 20.1 per cent, respectively.
Capital city property was much more likely to resell at a profit compared to regional areas, but the last quarter showed that this gap was shrinking.
Overall, houses proved to sell at a profit more than units, according to Tim Lawless, head of research at CoreLogic.
“This may be attributed to the underlying land value of detached houses, which is a significant part of the overall value. But it’s also because unit markets can be more prone to oversupply than house markets,” Mr Lawless said.
The report also saw investors were more likely to resell at a loss than owner-occupiers, with 10.1 per cent of investor-owned properties reselling at a loss compared to 9.8 per cent of owner-occupied properties.
This percentage could largely be attributed to Sydney, regional NSW and Hobart, as these areas were the only major locations where investors resold at a loss more than owner-occupiers.
“Investors have taxation rules to consider and could be more prepared to incur a loss because (unlike owner-occupiers) they can offset those losses against future capital gains,” Mr Lawless said.
“If home values fall, investors (who until recently have been increasingly active in the housing market) may be more inclined to sell at a loss and offset those losses, which could result in increased supply at a time when housing demand fall is falling due to declining values.”