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9 out of 10 homes selling at a profit

9 out of 10 homes selling at a profit

The value of residential sales on resold properties hit $17.7 billion in the September 2017 quarter, far greater than any losses seen across Australia.

According the latest CoreLogic figures, resale losses grossed $453.8 million, with 90.8 per cent of all properties resold hitting at a price at, or in excess of the previous purchase price.

The CoreLogic figures are on trend with June 2017 quarter and September 2016 quarter figures, which recorded 90.0 per cent of resales at a profit.

Proportion of total resales at a loss/gain, houses vs. units, Sep 2017 quarter


Source: CoreLogic

According to the above chart, Capital city properties resold 92.6 per cent at a profit, compared to 87.8 per cent of regional properties.

Melbourne saw the greatest percentage for houses resold (99.2 per cent for profit), and Sydney for unit resales (98.5 per cent for profit). Regional NSW hit 95.7 per cent for houses resold at a profit and Regional VIC had 93.4 per cent of units resold at a profit.

CoreLogic also reported that over the first three quarters of 2017 there has been “a slight increase in the proportion of properties reselling for less than their previous purchase price”.  

CoreLogic Head of Research, Cameron Kusher, believes this is largely being “driven by capital city markets in which the instances of loss-making resales have trended a little higher while the regional markets are seeing a decline in loss-making resales.”  

“Despite ongoing commentary about the weaker unit market conditions, the Pain & Gain September quarter research showed that detached houses have actually driven the increase in loss making resales over the first three quarters of 2017,” said Mr Kusher.

Reports of the real estate market cooling in Sydney and Melbourne has been mentioned previously on RateCity, and due to this Mr Kusher expects the instances of resales at a loss will likely “continue to trend higher throughout the final quarter of 2017 and into 2018.”

“It is reasonable to expect that the instances of loss-making resales of units may climb over the coming year as the housing market loses momentum and supply increases.

“As values fall in Sydney, this could lead to some increases in loss-making resales in areas surrounding Sydney,” said Mr Kusher.

However, for non-Sydneysiders, losses are likely to remain low in Geelong and expected to trend lower on the Gold Coast and Sunshine Coast, according to the report.

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Learn more about home loans

Cash or mortgage – which is more suitable to buy an investment property?

Deciding whether to buy an investment property with cash or a mortgage is a matter or personal choice and will often depend on your financial situation. Using cash may seem logical if you have the money in reserve and it can allow you to later use the equity in your home. However, there may be other factors to think about, such as whether there are other debts to pay down and whether it will tie up all of your spare cash. Again, it’s a personal choice and may be worth seeking personal advice.

A mortgage is a popular option for people who don’t have enough cash in the bank to pay for an investment property. Sometimes when you take out a mortgage you can offset your loan interest against the rental income you may earn. The rental income can also help to pay down the loan.

When does Commonwealth Bank charge an early exit fee?

When you take out a fixed interest home loan with the Commonwealth Bank, you’re able to lock the interest for a particular period. If the rates change during this period, your repayments remain unchanged. If you break the loan during the fixed interest period, you’ll have to pay the Commonwealth Bank home loan early exit fee and an administrative fee.

The Early Repayment Adjustment (ERA) and Administrative fees are applicable in the following instances:

  • If you switch your loan from fixed interest to variable rate
  • When you apply for a top-up home loan
  • If you repay over and above the annual threshold limit, which is $10,000 per year during the fixed interest period
  • When you prepay the entire outstanding loan balance before the end of the fixed interest duration.

The fee calculation depends on the interest rates, the amount you’ve repaid and the loan size. You can contact the lender to understand more about what you may have to pay. 

What are the features of home loans for expats from Westpac?

If you’re an Australian citizen living and working abroad, you can borrow to buy a property in Australia. With a Westpac non-resident home loan, you can borrow up to 80 per cent of the property value to purchase a property whilst living overseas. The minimum loan amount for these loans is $25,000, with a maximum loan term of 30 years.

The interest rates and other fees for Westpac non-resident home loans are the same as regular home loans offered to borrowers living in Australia. You’ll have to submit proof of income, six-month bank statements, an employment letter, and your last two payslips. You may also be required to submit a copy of your passport and visa that shows you’re allowed to live and work abroad.

Why does Westpac charge an early termination fee for home loans?

The Westpac home loan early termination fee or break cost is applicable if you have a fixed rate home loan and repay part of or the whole outstanding amount before the fixed period ends. If you’re switching between products before the fixed period ends, you’ll pay a switching break cost and an administrative fee. 

The Westpac home loan early termination fee may not apply if you repay an amount below the prepayment threshold. The prepayment threshold is the amount Westpac allows you to repay during the fixed period outside your regular repayments.

Westpac charges this fee because when you take out a home loan, the bank borrows the funds with wholesale rates available to banks and lenders. Westpac will then work out your interest rate based on you making regular repayments for a fixed period. If you repay before this period ends, the lender may incur a loss if there is any change in the wholesale rate of interest.