The world’s largest property data analytics company, CoreLogic have released their quarterly “Pain and Gain Report”, detailing the proportion of properties sold in Australia for a loss (pain) or a profit (gain) on their previous purchase price in the June quarter.
The report showed that the percentage of homes being sold for a gross loss (from their previous purchase price) over the June quarter has increased from 9.3% to 9.5% – the highest proportion for over two years. The average value lost was $73,009.
This trend is being clearly seen in Brisbane’s Northern Suburbs, with apartments on Parkland Street, Nundah (from $540,000 to $525,000 in less than four years), Harbour Road, Hamilton ($405,545 to $370,000 in under five years) and Playfield Street, Chermside ($399,000 to $390,000 in nine years) all losing value when sold earlier this year.
Principle Agent Mario Lattanzi says these examples suggest that buying units is a somewhat risky option, “In the current unit market, extreme caution is required when buying new or off the plan units.”
The report notes that the vast majority of homes (more than 9 out of 10) still sell for a profit, but what does this slight increase say about the present state of the market?
Good things come to those who wait?
A clear pattern has emerged from this report in that the longer the “hold” period – or time between sales – the more likely a profit will be made.
Capital city properties that sold for a loss had been owned for an average of just 5.7 years (6.5 in Brisbane). Those that were sold for a profit had an average stay time of 10.3 years, and those that doubled their value had an average hold time of 17.4 years.
These values show that property remains a long-term investment.
The impact of unit oversupply.
The CoreLogic Data shows that nationally, units (12.5%) are making more resale losses than houses (8.3%).
In Brisbane, the difference is even more pronounced, with the proportion of units selling at a loss (17.3%) being more than double that of houses (5.5%).
This high rate of unit resale losses in Brisbane is much higher than the national average for units at 9.5%, possibly highlighting the early impact of the perceived oversupply of units in inner city Brisbane.
Investors v Owner-Occupiers
Nationally, properties owned by investors were more likely to sell for a loss than those sold by owner occupiers. 8.2% of homes in Australia sold by owner occupiers in the June quarter sold for a loss, compared with 12.3% of homes sold by investors making a loss.
In Brisbane, the difference is even more stark, with investors more than twice as likely to sell a property for a loss compared to owner-occupiers (6.1% to 12.7%).