Sydney at record low loss takers, with Queensland's Wide Bay the worst: RP Data

Sydney at record low loss takers, with Queensland's Wide Bay the worst: RP Data
Sydney at record low loss takers, with Queensland's Wide Bay the worst: RP Data
The proportion of loss making real estate re-sales has peaked, according to the latest RP Data report covering 64,518 residential property resales nationally over the first quarter of 2014.

Nationally 9.8% of all homes which sold over the three months to March 2013 incurred a gross loss, just a tweak above the 9.7% in the December 2013 quarter.

It compared with a recent peak of 13.1% of re-sales over the three months ending January 2013.

With around 6.5% of all capital city re-sales recording a gross loss, capital city have had a lower proportion of loss making re-sales than the national average since early 2009.

The report coincides with record lows for subprime RMBS housing loans, as measured by Standard & Poor's Performance Index (SPIN).

Sydney at record low loss takers, with Queensland's Wide Bay the worst: RP Data

Source: RP Data

The lowest proportion of loss making re-sales were in Sydney at around 3%.

Over the three months ending March 2014, 6.5% of all capital city re-sales recorded a gross loss compared to 16.0% of sales at a loss across the combined regional areas. Loss-making re-sales are down from 9.4% a year ago across capital cities and down from 18.2% in regional markets. 

Huge loss making re-sales are being recorded within the regional Queensland marketplace and in Tasmania.

Queensland’s Wide Bay region has recorded the largest proportion of loss making resales, with 30.6% of all March 2014 quarter re-sales transacting at a price lower than what the home was purchased.

The weakness in these two regions is mostly reflective of the conditions across the lifestyle markets where the correction in home values has been more significant, Tim Lawless at RP Data has previously advised.

Of those homes sold at a loss across Australia, those held for a short period of time have been more susceptible to loss despite home values having risen over the past year.

Sydney at record low loss takers, with Queensland's Wide Bay the worst: RP Data

Source: RP Data

Around 12% of owners who purchased and sold in the same year, sold at a gross loss, the RP Data Pain/Gain report noted.

"Keep in mind that the actual number of homes re-sold in less than a year is very small," Tim Lawless noted earlier this year.

But a greater proportion of loss making sales has occurred across those homes re-sold after three to five years (19.4%).

"If an owner wishes to double their initial outlay upon re-sale they generally need to hold the home for at least a decade," Tim Lawless advised earlier this year.

The December quarter report showed 55.1% of homes re-sold between 10 and 15 years after purchase sold for double the purchase price and 95.1% of resales after 15 years were for more than double the initial purchase price.

The gross value of losses on homes re-sold over the March quarter was recorded at $381.1 million and the average gross loss per loss making transaction was $60,544.

Some 90.2% of all re-sales over the March quarter of 2013 transacted at a gross profit, with 30.6% of all re-sales at least doubling their money compared with their original purchase price.

The gross profit on these re-sales was $12.2 billion and the average gross profit per profit making transaction was $225,088.

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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