Losses on dwelling resales ease further: CoreLogic pain & gain report

There were fewer loss making resales across both houses and units in Q1, but the rate of loss making sales remains substantially elevated in the unit segment

Losses on dwelling resales ease further: CoreLogic pain & gain report
Losses on dwelling resales ease further: CoreLogic pain & gain report

The portion of profit making resales of property is on the rise, CoreLogic’s Pain and Gain report for the March 2021 quarter found.

Some 90% of sales were at higher than the initial purchase price, up from 89% in the previous quarter and 86% in the June 2020 quarter. 

CoreLogic analysed 98,000 resales across Australia from the March 2021 quarter. 

Units were more than twice as likely to sell at a loss as houses, and owner occupiers enjoyed a higher incidence of profitability than investors, Eliza Owen, head of research said.

“Between the market bottoming out in September 2020, and the end of March 2021, Australian dwelling values have risen 8.2%. 

"The total profit reaped by sellers in Q1 2021 was $30.6 billion nationally. 

“March 2021 also marked the fourth consecutive quarter where regional Australian resales sustained a higher rate of profitability than in the capital city markets."

90.6% of regional resales saw a profit through the quarter, compared with 90.0% of capital City Sales

“While there were fewer loss making resales across both houses and units in Q1, the rate of loss making sales remains substantially elevated in the unit segment. 

"In the three months to March, 16.8% of units sold for a loss across Australia; almost two and a half times the rate of loss making house sales (6.8%),” says Ms Owen.

In the Melbourne LGA unit market the volume of loss-making unit resales reached a record high at 173. 

"However, this is in the context of rising overall sales volumes, and still wasn’t at a peak proportion. 

"For this region, investor sales may have been triggered by rental values falling more than 20% over the year. 

"As long as COVID weighs on international travel and inner-city economic activity, this market is likely to see subdued performance.

“For some pockets of the market, ongoing international border closures have already led to more subdued price growth, and a decline in rental return. 

"These factors may slow the growth in profitability derived from housing in the coming quarters.”

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

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