Properties selling at a loss

THE “pain is climbing” in Australia’s housing market with more than 50 per cent of properties in a Perth suburb and up to one in three properties in Sydney and Melbourne suburbs selling at a loss.

As Australia’s biggest ever property bubble continues to unwind, research firm CoreLogic’s latest Pain and Gain report shows a rising number of properties being sold for less than their purchase price.

“When relatively few properties are selling at a loss it’s a general indicator of a stronger housing

market,” said CoreLogic senior research analyst Cameron Kusher.

“If a higher proportion of properties are reselling at a loss it’s a sign of weaker housing market conditions.”

In the case of Melbourne it’s the worst result since August 2014, in Brisbane since November 2013, in Adelaide since June 2016 and in Perth “we haven’t recorded this level of resales at a loss, ever”.

In Melbourne, the CBD fared the worst with 31.8 per cent of properties sold at a median loss of $A44, 406 ($F66, 548) during the quarter. Stonnington had the second highest share of resale losses at 24 per cent followed by Yarra on 18.5 per cent.

In Sydney, Strathfield had the highest share of resale losses at 20 per cent, with a median loss of $A94, 000 ($F140, 871). Parramatta was second on 18.8 per cent followed by Ryde on 15.7 per cent.

In Brisbane, the resale losses were highest in the CBD at 14.1 per cent, Somerset at 10.9 per cent and Logan at 10.1 per cent. In Adelaide it was the CBD at 23.5 per cent, Playford at 14.6 per cent and Campbelltown at 13.3 per cent.

In the Perth CBD, an astonishing 60.4 per cent of all properties sold at a median loss of $A115,000 ($F172,800). Rockingham came in second at 39.2 per cent followed by Mundaring at 38.9 per cent.

According to CoreLogic, 87.9 per cent of all resales during the quarter made a gross profit for a total of $A14.3 billion ($F21.43 b), down from 89.5 per cent in the previous quarter and 91 per cent in the March 2018 quarter.

But “the real kicker” is that it was the lowest proportion of profitmaking sales since March 2013.

On the pain side, Australia had a total of $A486.8 million ($F729.55m) in realised gross losses from resales over the March quarter, with Perth taking the highest share of losses at 24.8 per cent followed by Sydney at 19.9 per cent.

While loss-making sales are climbing “quite rapidly” for both houses and units, units are bearing the brunt of the pain — just 79.5 per cent of units resold for a profit, the worst result since January 1999.