19 October 2015
Capital cities a better bet for residential investment
A recent report from RP Data that compares the most recent sale
price to the previous sale price in order to determine whether the
property sold at a gross profit or gross loss, has highlighted the
fact that the capital city housing markets continue to record a
lower proportion of loss-making resales than regional areas of the
"Capital City housing markets
continue to prosper
over regional centres."
Over the June 2015 quarter, 9.1% of all homes resold nationally
recorded a gross loss when compared to their previous purchase
price. But while this figure may sound high, it is important to
note that the vast majority (90.9%) of properties resold over the
quarter did so at a profit. In fact, 30.8% of homes resold for more
than double their previous purchase price.
Although there was a slight rise at a national level, the
proportion of loss-making resales has consistently been below 10%
over the past 16 months, showing a significant improvement in
loss-making resales, which were as high as 12.9% over the September
However, some of the major regions of the country which are
intrinsically linked with the resources sector show that a
heightened level of loss-making sales is evident as the mining
investment boom slows. Over the June 2015 quarter, 47.6% of
properties resold in Mackay sold at a loss, as buyer demand remains
relatively low in these markets.
Throughout the combined capital cities, the proportion of
loss-making resales is much lower (6.1%) than across the combined
regional areas (15.2%), with the proportion of loss-making resales
largely trending lower in Sydney, Melbourne, Brisbane, Hobart and
The Brisbane council area, at 6.3%, has significantly lower
proportions of loss-making sales compared to all other regions in
South-East Queensland, where the proportion of loss-making resales
was in double digits.
"Regions with growth aligned
with the resources sector
show heightened losses."
The data also highlights the divergent trends across housing
markets over time. Ownership of property, whether for investment or
owner occupier purposes, should be seen as a long-term investment.
Across the country, those homes that resold at a loss had an
average length of ownership of 5.3 years. Across all sales
recording a gross profit, the average length of ownership was
recorded at 9.9 years, while homes which sold for more than double
their previous purchase price were owned for an average of 16.4
It is also interesting to note that the data suggests that
apartments tend to perform better than houses for returning a
profit over a shorter hold period.
Source: CoreLogic RP Data, Pain and Gain Report, June
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