It's been very hard to lose on Australian housing in recent years

WILLIAM WEST / AFP / Getty Images
  • Just 8.9% of Australian homes sold for a gross loss in the December quarter of 2017, according to data from CoreLogic.
  • Capital city locations continue to outperform regional areas.
  • More units than houses sold for a loss during the quarter.

Most homes in Australia continue to sell at a higher price than what they were originally purchased for, even with a recent slowdown in the east coast property market.

That’s the finding of the latest Pain and Gain report released by CoreLogic today which found more than nine in 10 Australian properties sold for a higher price in the December quarter of last year.

“Across the nation, 91.1% of all properties that resold in the December quarter went for a price above their previous purchase price,” said Cameron Kusher, research analyst at CoreLogic.

“The 91.1% figure was up slightly from 90.9% at the end of the third quarter of 2017 but slightly lower than the 91.3% over the final quarter of 2016.”

The Pain and Gain report measures gross profits from property resales, and does not account for holding costs for owning property such as mortgage repayments, council rates and conveyancing costs, among others.

Source: CoreLogic

In dollar terms, profits earned from property resales over the quarter totalled $17.832 billion, largely reflecting strong price growth in Sydney and Melbourne in recent years, Australia’s largest and most expensive housing markets.

“The analysis found that the vast majority of the $17.832 billion in profit was generated by Sydney and Melbourne and accounted for 33.1% and 29.4% of total profits respectively.

“This is reflective of both the higher cost of housing in Sydney and Melbourne and the strong growth in dwelling values over recent years which have resulted in substantial profits,” Kusher said.

Reflecting that less that 10% of properties sold for a loss in the final three months of 2017, the total value of resale losses amounted to just $442 million.

By location, CoreLogic found that significantly fewer properties sold for a loss in capital cities than in regional areas, continuing the trend seen in prior years.

Source: CoreLogic

“It should be noted, though, that the instances of of loss is showing little change across combined capitals cities while loss-making sales continue to trend lower across regional areas, highlighting improving conditions, particularly in coastal markets where demand for lifestyle properties has lifted,” says Kusher.

By type of property, CoreLogic found that the proportions of houses reselling for a gross profit continued to sit above that for units, coming in at 92.3% and 88.2% respectively during the quarter.

Source: CoreLogic

“For the capital cities, the proportion of houses reselling at a gross profit was higher over the quarter in Brisbane, Adelaide and Darwin but lower elsewhere,” says Kusher.

“For units, there was a higher proportion of resales at a profit over the quarter in Sydney, Melbourne, Adelaide, Hobart and Canberra.”

Looking ahead, Kusher says the proportion of loss-making sales could increase in the quarters ahead should property markets continue to soften.

“More up-to-date dwelling value data has shown that in most capital cities dwelling values have been falling over recent months while regional values have continued to increase, albeit at a slower pace,” he says.

“These trends are expected to continue in 2018 and given that it should be expected that the proportion of properties reselling at a profit may begin to reduce over the coming quarters.”

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