Australian properties resold for $14.06 billion in profits, but 11.1% of homes were resold at a loss.
Key findings from the CoreLogic Pain & Gain Report for the September 2018 Quarter includes:
- Property resales in Australia earned $14.060 billion in profits nationally.
- National losses from property resales amounted to $488.1 million.
- Houses have consistently experienced a higher proportion of resales at a profit than units.
- Greatest capital city share of profits were in Sydney (40.9%) and Melbourne (32.5%).
- Regions with the greatest share of regional market profits were: Regional NSW (46.3%) and Regional Qld (30.4%).
11.1% of Australian homes resold in the three months to September 2018 went for a price less than what they were purchased for.
The latest CoreLogic ‘Pain and Gain’ report – www.corelogic.com.au/news found that although the vast majority (88.9%) of Australian residential properties resold for a gross profit over the September quarter, this was actually the weakest quarter for profit making resales since the three months to August 2013. By comparison, at the end of the June 2018 quarter, 89.7% of all properties were resold for a profit and over the September 2017 quarter, 91.1% of properties resold for a profit.
The gap between houses and unit resales for a profit widened too: 90.8% of all house resales made a gross profit, but just 83.6% of all unit resales were at a profit. What they both had in common was that both houses and units recorded a fall in profit-making resales over the quarter.
Looking beyond the percentages and focusing on the dollar values, in the September 2018 quarter, the total value of profit derived from re-sold dwellings was recorded at $14.060 billion compared to $488.1 million in realised gross losses from resales.
The majority of the $14.060 billion in profit was generated by Sydney and Melbourne which accounted for 31.0% and 24.7% of total profits nationally respectively. Cameron Kusher comments: “This is reflective of both the higher cost of housing in Sydney and Melbourne and the strong growth in dwelling values prior to the recent downturn, which has resulted in substantial profits. As a comparison, these two cities accounted for just 12.3% and 7.4% of the total value of losses nationally over the quarter.”
The latest CoreLogic Pain & Gain Report is an analysis of homes resold over the September quarter (1 July 2018 - 30 September 2018) across the country. The report compares the most recent sale price to the home’s previous sale price, determining whether the property resold at a gross profit or gross loss. It provides a quarterly proxy for the performance of the housing market and highlights the magnitude of profit or loss the typical seller of a home makes in those regions analysed.
Regions with the highest share of losses nationally were Perth (23.7%) and regional Queensland (19.6%).
Analysis on regions with the lowest proportion of resales at a loss is interesting, as explained by Kusher: “The data shows that some regions surrounding Sydney and Melbourne are recording even fewer resales at a loss than the capital cities. At the other end of the spectrum, six regions - all linked to the resources sector, recorded at least 40% of all resales at a loss over the quarter. It’s important to note though, that although in many of these regions, the share of losses is now lower than at the peak, when you consider the material decline in values across these regions, these instances of loss remain elevated. Ultimately, this is a reflection that housing values remain well below their peaks in these areas.”
According to the quarterly results, capital city housing markets have continued to record a lower proportion of resales at a loss than regional markets, but as Kusher comments, there is more to that story: “Loss-making resales across the combined capital cities increased by a greater amount than in regional markets. We expect the proportion of loss-making resales to climb further over the coming quarters as housing market conditions continue to slow.”