A third of Gold Coast and Sunshine Coast properties re-sold at loss: RP Data

Larry SchlesingerDecember 7, 2020

Coastal Queensland including the Gold Coast, Far North Coast and Sunshine Coast remain the weakest property markets in Australia, with more than a third of properties in these locations re-sold at a loss in the March quarter.

This is in stark contrast to the overall performance of the property market where only 12.7% of proprties re-sold at a gross loss, according to figures in RP Data’s quarterly Pain and Gain report.

The report reveals that of the 58,677 residential property re-sales recorded over the March quarter, 87.3% sold for a gross profit.

Nationally, the gross profit from these re-sales equated to $9.6 billion while the gross value of losses was $463.9 million.

The report compares March quarter sales prices with the previous sales price.

It does not take into account things like borrowing costs, interest on loans, renovations or maintenance costs over the period the property has been owned.

The lowest proportion of loss making re-sales were recorded in Canberra (4.8%), Perth (6.3%), regional Northern Territory (6.8%), and Sydney (7.1%).

The worst performing region was regional Queensland with 27.5% of properties selling at a loss with the Gold Coast particularly weak with more than a third of properties (37.1%) selling below their previous purchase price followed by Far North Queensland (35.9%)  and the Sunshine Coast (33.9%).

pain_and_gain

Source: RP Data

The report also shows that properties bought before the GFC have performed much better when re-sold compared with those bought after the crisis.

“The likelihood of making a gross profit or loss is quite different based on the length of time a property has been owned. As a stark example, those homes that were previously purchased prior to January 1st, 2008 (pre-GFC) and were subsequently sold during the March quarter of this year, only 8% of re-sales were made at a gross loss,” says RP Data national research director Tim Lawless.

“For those homes that were purchased on, or after January 1st 2008, the propensity to make a loss on the sale climbs substantially. Of those homes that sold over the March quarter, 25% recorded a gross loss relative to the previous purchase price,” he says.

According to the report, the likelihood of making a gross profit or loss is quite different based on the length of time a property has been owned.

For properties that made a gross loss over the March quarter, their average length of ownership was just 4.8 years.

Properties that recorded a gross profit were held for an average of 9.7 years, while those homes that recorded a gross profit of more than 100% were owned for an average of 15.4 years.

The median gross profit per profit making transaction was $133,000 while the median gross loss per loss making transaction was $30,000.

The strongest performing markets were regional areas “often associated with the resources sector” which recorded very low rates of loss making re-sales.

Queensland’s Central West, Victoria’s Loddon region and the Kimberley and Pilbara regions of Western Australia all recording fewer than 5% of March quarter transactions at a loss.

In contrast lifestyle regions continued to show the largest proportion of loss making re-sales, particularly within the unit markets as opposed to detached housing markets.

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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