Properties sold at a loss have increased, reaching the highest level of loss-making sales in six years.
CoreLogic’s latest Pain and Gain report showed 12% of properties were resold at a loss in the first three months of 2019, marking an increase from 10.5% in December 2018.
During the March quarter, 87.9% of resales made a gross resale profit for a total of $14.3bn, the lowest proportion of profit-making sales since March 2013.
The data also showed the country had a total of $486.8m in realised gross losses from resales over the March quarter, with the highest share of losses in Perth and Sydney.
Investors were more likely to resell their properties at a loss than owner-occupiers, according to the report.
During the first quarter of the year, 10.5% of properties owned by owner-occupiers sold at a loss, compared to 16.7% for investment properties.
“Clearly any property owner will aim to make a profit from the sale of their property. In a falling market, owner-occupiers may be more prepared to sell at a loss if they are purchasing their next home at an equivalent or greater discount. Conversely, investors, because of taxation rules, would seemingly be more prepared to incur a loss because (they, unlike owner-occupiers,) can offset those losses against future capital gains,” said CoreLogic analyst Cameron Kusher.
All capital cities saw an increased number of loss-making resales over the March quarter, compared to the December 2018 quarter.
Sydney saw a 9% increase of loss-making resales, Melbourne 6.4%, Brisbane 11.5%, Adelaide 8.4%, Hobart 2.1%, and Canberra 10.2%. Meanwhile, resale losses for Perth at 32.8% and Darwin at 45.5% were at record levels.
The report also found that apartments were more likely to resell at a loss than to houses. During the March quarter, 20.5% of apartments resold at a loss, compared to 9.5% of houses resold at a loss.
