More owner occupiers sell at a profit than investors

More owner occupiers sell at a profit than investors

Australia’s housing market continues to make money for owner occupiers and investors, with 9 out of 10 resold properties making a profit in the June 2017 quarter.

According to the latest CoreLogic Pain & Gain report, 89.8% of dwellings which resold over the June 2017 quarter did so for more than their purchase price; a 0.3% increase on the 89.5% result recorded in the March 2017 quarter.

Combined, resales earned sellers $18.2 billion in gross profits in the June 2017 quarter, with the median profit recorded at $195,000.  On the other hand, gross resale losses totalled $469.6 million, with a median loss of $35,000. 

Of the property types to resell over the period, houses saw profit gains of 92.1%, while unit resales achieved an 87.5% gain.

So, who’s making all this money from property resales? According to CoreLogic, it’s owner occupiers, whose nationwide profitable resales were estimated at 92.3%, while investor profitable resales were estimated at 88.1%. Australia’s capital cities and regional areas both saw a significant gap between owner occupiers and investors in terms of profitable resales; a gap that was more extreme in the cities than in the country.   

CoreLogic research analyst, Cameron Kusher, said that Sydney was the only major region of the country where investors were more likely to resell at a profit than owner occupiers. 

“Investors were 4.8 times as likely to resell at a loss as owner occupiers in Melbourne, in Brisbane the figure was 2.8 times and in Canberra the figure was 3.5 times.”

“For owner occupiers, the results show the benefits of selling in a buoyant market.  In a falling market, owner occupiers may be more prepared to sell at a loss if they are purchasing their next home at an equivalent or greater discount.  Because of taxation rules, investors may be more prepared to incur a loss because they, unlike owner occupiers, can offset those loses against future capital gains.”  

“Should home values fall in the future, investors, which have been increasingly active in the housing market, may be more inclined to sell at a loss and offset those losses which in turn could result in much more supply becoming available for purchase at a time in which demand for housing falls because values are declining.” 

Mr Kusher added that regions making fewer profitable resales are closely linked to the mining and resources sectors.  

“While the June 2017 quarter results show a reduction in the proportion of profit-making sales in some of these regions, home owners seem willing to sell but there remains little demand to purchase in these regions which is resulting in a high proportion of vendors materialising losses. The regions with the lowest proportion of resales at a loss makes for interesting reading. 

“The Sydney and Melbourne housing markets have been powerhouses over recent years however, regions outside but adjacent to Sydney are seeing a lower proportion of resales at a loss.  Similarly in Victoria, Melbourne continues to see relatively few resales at a loss however, the proportion of loss-making resales is actually lower in both Geelong and Bendigo.” 

Region Pain (Houses) Gain (Houses) Pain (Units) Gain (Units)
Sydney 1.9% 98.1% 1.6% 98.4%
Regional NSW 4.6% 95.4% 8.3% 91.7%
Melbourne 1.1% 98.9% 9.6% 90.4%
Regional VIC 7.1% 92.9% 7.2% 92.8%
Brisbane 4.1% 95.9% 25.8% 74.2%
Regional QLD 15.8% 84.2% 19.4% 80.6%
Adelaide 7.5% 92.5% 12.4% 87.6%
Regional SA 17.2% 82.8% 42.3% 57.7%
Perth 24.2% 75.8% 37.8% 62.2%
Regional WA 34.2% 65.8% 43.5% 56.5%
Hobart 3.9% 96.1% 8.5% 91.5%
Regional TAS 14.0% 86.0% 19.3% 80.7%
Darwin 28.4% 71.6% 53.4% 46.6%
Regional NT 17.3% 82.7% 29.6 70.4%
Australian Capital Territory 2.2% 97.8% 20.7% 79.3%
National 7.9% 92.1% 12.5% 87.5%
Capital cities 6.0% 94.0% 11.1% 88.9%
Regional 11.0% 89.0% 15.9% 84.1%

Source: CoreLogic

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