Australian properties are reselling at losses not seen for six years, led by Melbourne and Sydney

Photo by Ernst Haas/Ernst Haas/Getty ImagesHow some recent investors no doubt feel as the market turns.
  • 12% of owners and investors who sold property in the first quarter of 2019 did so at a loss, the highest level in six year according to analysis from CoreLogic.
  • Central Melbourne was one of the worst performers with 31.8% of sales coming at a loss. In comparison, Strathfield was Sydney’s hardest-hit area with 20% of properties sold at a loss over the quarter.
  • More than one in five apartmetns sold for a loss compared to less than one in ten houses. Meanwhile, 16.7% of investors sold at a loss compared to 10.5% of owner-occupiers.

Nearly one in eight Australian properties were sold at a loss in early 2019, marking the worst reselling conditions in six years.

That’s the conclusion of the latest report from property research house CoreLogic, which shows that 12% of all properties sold in the first quarter of 2019 went for less than they were bought for. That’s well up from 10.5% in the previous quarter and 9% in the same quarter last year.

Investors have borne the brunt of that, with more than one in six selling out at a loss compared to just over one in ten homeowners.

“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,” CoreLogic analyst Cameron Kusher wrote in the report.

How major capitals stack up (CoreLogic)

“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.”

In context, however, the $486.8 million that was collectively lost by resellers over the period is small change compared to the $14.3 billion made in gross profits nationally.

Units meanwhile make up the lion share of loss-making dwellings.

Just 9.5% of houses sold at a loss compared to 20.5% of units (CoreLogic)

That trend is being led by souring conditions in Australia’s two largest markets, Sydney and Melbourne, where nearly a third of homes are selling at a loss in some areas.

The worst Melbourne suburbs

Central Melbourne was home to 31.8% sales below their purchase prices. Nearby Stonnington, which covers some of the city’s most expensive suburbs like Toorak and Malvern, was the next worst performing Melbourne area with nearly a quarter of sellers stomaching a loss. Yarra (18.5%), Moonee Valley (13.6%), Boroondara (12.3%) rounded out the worst performers.

The worst Sydney suburbs

Meanwhile, in Sydney, it was the outer residential suburbs that were hit the hardest. One in five Strathfield owners sold out a loss, while Parramatta (18.8%), Ryde (15.7%) Lane Cove (15.2%), and Canterbury-Bankstown (13.8%) closely followed.

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