Prices potentially going backwards - most obvious in Sydney prestige market
As the debate escalates on whether Sydney house prices are set to fall, plateau or edge up in 2016, a very small number of loss making sales are occurring across Sydney. Rare opportunities to possibly snare a bargain.
Currently only 1.7 per cent of homes sold are selling at a loss for their vendor based on their prior purchase price, according to CoreLogic RP Data, with the numbers increasing the further outside of what were the early 2015 suburban Sydney hotspots.
In recent months the municipalities of Rockdale, Fairfield and Ashfield have had three percent or higher of sales as loss takers.
Regional Sydney loss-making districts have been Wyong, Gosford and the Blue Mountains.
The prestige market has also been problematic with losses in Mosman, Pittwater and Woollahra muncipalities.
The biggest known price drops last year were in Darling Point when mining boss Peter Freyberg, the Australian head of Glencore Xstrata, sold his four-bedroom residence for $5.5 million having paid $7 million in 2008 ahead of the GFC.
Urologist Phillip Stricker sold his Darling Point penthouse last year for $6.575 million after paying $7.4 million in 2010.
A $10 million Mosman harbourfront sold last year at the same price as its 2011 sale, so no gain in four years for the vendor, the Commonwealth Bank chairman David Turner.
In Woollahra $6 million was secured for a contemporary terrace which fetched $6.5 million in 2011.
Property success depends on your timing in the cycle, but also not getting emotionally carried away in your purchase price negotiations, one agent noted.
"The most important factor is the time the property is held; the property market is cyclical so those who buy at the peak of the market must ensure they are not selling at the following trough," CoreLogic RP Data advised.
The 1.7% of homes resold in Sydney over the third quarter of 2015 that sold at a loss was the lowest proportion on record.
Outside Sydney it noted while localities linked to the mining sector have seen their proportion of loss-making sales rise over recent years, the coastal markets have generally seen conditions improve.
The proportion of loss-making resales has been recorded at: 1.7% in Illawarra, 2.6% in Newcastle-Lake Macquarie, 12.5% in Richmond-Tweed and 8.3% in Mid-North Coast.
Coastal lifestyle locations continued to be traps for overpaying with one sale at Avoca Beach at $825,000 in 2004, reselling at $705,000 last year. At Ettalong Beach an apartment sold last month at $350,000 having been bought in boomtime 2003 at $360,000.
But price dips are an opportunity for savvy buyers. Hong Kong jockey Nash Rawiller and his wife Sarah secured $3.7 million for their redundant Maroubra home.
Rawiller, who won three Sydney riding premierships after making the move from Melbourne in 2007, had bought the property for $3.07 million in 2012 after it had sold at $4 million in pre-global financial crisis 2008.
The 3.7% of homes in Rockdale that experienced a total loss in the September quarter typically went back by $158,000. It was a similiar $150,000 for the Pittwater loss takers who had owned for around five years. However 96% of Pittwater homes were sold at a profit, typically gaining $411,000 having owned for nine years.
In the Blue Mountains there was a typical $72,000 loss for the three percent who went out backwards.
The data doesn’t include expenses such as holding costs and purchase and selling costs so the proportion of actual loss-making re-sales would be higher on a net basis.
This article was first published in the Sunday Telegraph.