Loss-making resales increase over the June quarter

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The number of houses and units resold at a loss in both capital cities and regional areas increased over the June quarter, according to the latest CoreLogic Pain & Gain report.

As much as 12.2% of houses and 19.9% of units in regional markets were sold below their previous purchase prices, continuing the loss-making resale trends that started in the August 2015 quarter for houses and the February 2016 quarter for units.

Meanwhile, capital city houses resold at a loss increased from 5.7% in the March quarter to 5.9% in the three months to June. 9.5% of units were also resold at a loss. The proportion of loss-making resales over the quarter increased across each capital city with the exception of Melbourne and Canberra.

In spite of these figures, CoreLogic head of research Cameron Kusher said that these numbers are still considered to be low historically.

“While loss-making resales increased over the quarter, historically, most cities are still seeing quite a low instance of homes reselling at a loss,” said Kusher.

“However, Perth and Darwin are the exceptions, with the proportion of loss-making resales at, or close to, historic highs.”

As much as 20.1% of Perth homes were resold at a loss, while Darwin registered 24.2% – the highest proportion since December 2002.

Units sold at a loss were also higher in number compared to houses across capital and regional markets. Only Sydney had a lower proportion of units reselling at a loss compared to houses.

“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,” said Kusher.

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