Fewer homes selling at a loss across Australia

After showing a consistent upwards trend, the proportion of homes selling at a loss across the country has eased over the final quarter of 2012.  Based on all dwelling sales over the December quarter 2012, 12.5% of all properties sold for less than their initial purchase price compared to 32.1% of homes selling for more than double their original purchase price.  The result highlights that many vendors continue to enjoy a significant profit on the sale of their home with 45.1% of all home sales over the quarter realising a profit of more than 50% greater than the purchase price.

As the above graph shows, the instance of homes selling at a loss has eased over recent months but on an historic basis the trend remains at elevated levels.  On the other hand, the proportion of homes selling for more than double their purchase price is at low levels after trending lower over recent times.  The proportion of homes sold at a loss has eased from an historic high of 13.5% of all sales over the three months to September 2012.  Although 13.5% of properties sold at a loss over the September 2012 quarter, 30.9% of all homes still sold for more than double their initial purchase price.

The important thing to note with this data is that just because a person has sold at a loss it doesn’t necessarily indicate financial strain.  Some vendors are obviously willing to take a loss on the sale of their home if they are re-purchasing at what they perceive to be a lower price.  The most recent housing loan arrears figures published by the Reserve Bank showed that around 0.6% of all loans across the country were past 90 days due.  Nevertheless, there are regions across the country which are of concern considering just how high the proportion of homes selling at a loss is.

Across individual capital city housing markets, the proportion of homes sold at a loss over the December quarter 2012 ranges from 5.3% of homes in Canberra and Darwin to 18.9% in Brisbane.  On the other hand, the instance of home selling for more than double their initial purchase price was as high as 43.0% in Perth and as little as 26.4% in Sydney.  It is of course a concern that almost 1 in 5 homes sold in Brisbane over the quarter sold at a loss however, the majority of homes still showed a profit on sale.  Across the combined capital cities, the instances of loss are much lower than those nationally.  Over the December 2012 quarter, 9.9% of capital city house sales were made at a loss compared to 33.2% of sales at prices which were greater than double the original purchase price.

Throughout non-capital city housing markets the instances of loss has been quite varied.  Coastal markets which are associated with tourism and were formerly popular with ‘sea changers’ have typically incurred the greatest proportion of loss making home sales.  Conversely, regions linked to the mining and resource sector have typically been much less inclined to incur a significant loss on the sale of a home.

Queensland’s Gold Coast, Sunshine Coast and Far North (which includes Cairns) regions have recorded the greatest proportion of homes selling at a loss over the quarter.  These three regions have recorded 39.4%, 34.5% and 33.8% of homes respectively selling at a loss over the quarter.  Most of the other regions which have realised the greatest proportion of sales at a loss are prominent coastal housing markets.

Regional markets that are linked to the mining and resources sector have generally seen the lowest instances of loss over the quarter.  It is important to note that the turnover of stock in many of these regions is quite low due to limited housing stock across these markets.  The Far West region of New South Wales has recorded no sales at a loss over the quarter while Western Australia’s Pilbara region has only seen 2.3% of all sales at a loss and North Western New South Wales has recorded 4.3% of all home sales at a loss.

Overall, in certain areas there has been a high proportion of homes sold at a loss over the quarter however, it is encouraging to see that the instances of loss broadly across the country is falling.  The region’s most susceptible to losses are the coastal markets which were very popular with ‘sea changers’ in the lead up to the financial crisis as well as being popular locations for holiday homes.  As demand has fallen, vendors have had to significantly drop their prices in order to sell in this is reflected in the fact that certain markets are seeing a large proportion of homes selling at below their previous purchase price.  The better news is that there is not one region across Australia where the majority of sales are occurring at a price below the previous purchase and subsequently most vendors are realising some form of profit on the sale of their home.

About Cameron Kusher

Cameron Kusher is Head of Research at CoreLogic, specialising in primary and secondary data analysis, property market commentary and consultancy. Cameron has a thorough understanding of the fundamentals such as demographics, trends, economics and spacial analysis and is a regular keynote speaker for property-related groups, regulated industry bodies, corporations and the government sectors. Follow Cameron on Twitter @cmkusher

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4 Responses to Fewer homes selling at a loss across Australia

  1. sirio February 21, 2013 at 8:38 pm #

    It would be interesting to find out what’s the % of homes, bought in the last 5 years, that were resold at a loss.

  2. sandman March 5, 2013 at 8:31 pm #

    add in the round-trip cost of buy&sell a home of circa 7% (70% of the 0 to 10% bracket – roughly)
    Brisbane is about 30% folk selling at a loss!
    nice to see the ranges in the 0 to -5%, -10% -20% loss criteria…???
    add the number of sales & value of sales to get an idea of the approximate value wipe-out for those on the wrong side of the trade.

    Funny how folk only tell you about how much the make….not what they loose!

Trackbacks/Pingbacks

  1. Less homes selling for a loss | Shane Trimby's Real Estate Blog - February 23, 2013

    […] After showing a consistent upwards trend, the proportion of homes selling at a loss across the country has eased over the final quarter of 2012.  Based on all dwelling sales over the December quarter 2012, 12.5% of all properties sold for less than their initial purchase price compared to 32.1% of homes selling for more than double their original purchase price.  The result highlights that many vendors continue to enjoy a significant profit on the sale of their home with 45.1% of all home sales over the quarter realising a profit of more than 50% greater than the purchase price. Read More Here […]

  2. Daily Blockbrief – 22 February 2013 - April 29, 2014

    […] Fewer Homes Selling At A Loss Across Australia […]

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