More properties selling at a loss

Adam Smith 28 September 2016

house for sale propertyThe number of properties being resold at a loss has risen, but most home sellers are still seeing healthy profits.

The CoreLogic Pain & Gain report shows the proportion of capital city houses being resold at a loss has risen from 5.7% in the March quarter to 5.9% in the June quarter. The unit market performed worse, with 9.5% of units resold for less than the previous purchase price.

“Houses have typically recorded a superior rate of capital growth to that of units and those houses reselling at a profit tend to record a much greater profit than units. These factors go some way to explaining why units are recording a much higher proportion of loss-making resales than houses,” CoreLogic researcher Cameron Kusher said.

Kusher said units were also more likely to be owned by investors, who could offset losses against future capital gains. He said this was likely to provide investors a stronger incentive than owner occupiers to sell at a loss.

Most capital city properties saw strong profits, however. Houses which sold for a profit gained $363,442 on average, while profit-making units went for an average of $229,596 more than their purchase price.

Among the capital city properties that sold for a loss, houses went for an average of $94,926 less than their purchase price. Loss-making units sold for an average of $67,456 less than their previous purchase price.

Regional markets fared poorly compared to their capital city counterparts. In regional markets, 12.2% of houses and 19.9% of units sold for a loss. The average loss on a house was $64,423, while the average unit that sold for a loss went for $61,944 less than its purchase price.

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