Over the June quarter this year, investors have been more likely to resell their properties at a loss than owner-occupiers, according to CoreLogic Pain & Gain Report.
The study showed that 10.1% of investor owned properties sold at a loss compared to 9.8% for owner occupied properties. This trend was evident in Sydney, Regional New South Wales and Hobart, which were the only major regions of the country that recorded a higher proportion of investors resold their property at a loss than owner-occupiers.
CoreLogic Head of Research Tim Lawless explained that when investors feel they must make the most out of a weakening market, they would rather opt to sell – even at loss.
“Owner occupiers may be more prepared to sell at a loss if they are purchasing their next home at an equivalent (or greater) discount. Investors have taxation rules to consider, and could be more prepared to incur a loss because (unlike owner-occupiers) they can offset those losses against future capital gains," he said.
“If home values fall, investors (who have until recently been increasingly active in the housing market) may be more inclined to sell at a loss and offset those losses, which could result in increased supply at a time when housing demand fall is falling due to declining values.”
Digging deeper into the figures, it was found that throughout combined capital cities, the gap in profit making-resales between owner-occupiers and investors was not that huge, however the outcomes varied for individual cities. In fact, Melbourne investors were 3 times as likely to resell a property at a loss compared to owner-occupiers and in Canberra, they were 3.4 times as likely to sell for a loss.
Further, regional results revealed that 11.9% of investors were likely to resell a property for a loss. Clearly, this is not far off from 11. 7% of owner-occupiers willing to do the same.
"In each region, owner-occupiers were more likely than investors to resell for a profit were, but the performance gap between the two vendor types in the regions was nowhere near as big as that recorded in some capital city markets," CoreLogic stated
The CoreLogic report also showed that the second quarter saw an increase in the growth of re-sales profit – with gains totaling $15.683 billion – but that the share of re-sales sold at a profit (89.8%) was the lowest since October 2013.
