Of around 76,000 property resales in the first three months of this year, more than 92% provided their seller a profit, according to CoreLogic’s latest Pain and Gain report.
That marks a 1% dip on the prior quarter and the third consecutive quarterly decline in property profitability.
Notably, 99% of resales in Tasmanian capital, Hobart, resulted in a profit, with the median gain realised coming in at $342,000.
Other small capital markets providing consistent returns for investors include Canberra and Adelaide, with 98% of resales returning a profit.
Not to mention, profitability in Brisbane picked up last quarter, rising 20 basis points to 96%.
Across the entire nation, the median gain from a property resale was $276,000, the median loss was $40,000, and the median time a property was held for was around nine years.
And while Australia’s largest capitals – Sydney and Melbourne – saw a drop in profitable resales, some inner and surrounding suburbs saw a substantial gain in profitability.
In Sydney, the Northern Beaches and Camden respectively saw 97% and 98% of resales bringing in a profit. Meanwhile, in Victoria, 98% of resales in the Mornington Peninsula and Casey saw sellers better off.
In the meantime, Australian property prices rose over the course of March, April, and May. That suggests February was the trough, according to CoreLogic.
More property sales are resulting in a loss, however
Unfortunately, the rate of loss-making resales of houses increased by 20 basis points to 3.8% over the three months to the end of March, while those of units jumped 160 basis points to 15.4%.
That sees the gap between the two asset classes at a record high, driven by a jump in unprofitable unit sales in inner-city Melbourne.
"Given there is generally a higher concentration of investment ownership in the unit sector, the increase in servicing investment mortgages may be a factor contributing to the greater concentration of loss in unit resales," CoreLogic head of research Eliza Owen said.
Rising home loan repayments have likely also impacted the amount of time a property is held before sale.
Of those selling their property in the March quarter, 8.4% had held it for less than two years prior and, of those, 12.4% realised a loss on sale.
Comparatively, 6.6% of sellers in the first quarter of 2022 had owned their property for less than two years, with 3.4% of those experiencing a loss.
"Such short selling times that involve sellers incurring a loss may be considered unusual, because hold periods typically increase during housing value downturns, as sellers try to avoid making a loss,” Ms Owen said.
“The implication may be that some sellers are choosing to incur a loss from resale in order to avoid particularly high mortgage repayments in the current rate-hiking environment.”
Image by Nico Smit on Unsplash.
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