CoreLogic’s ‘Pain and Gain Report’ is a quarterly analysis of homes which were resold over the quarter. It compares the most recent sale price to the previous sale price in order to determine whether the property sold at a gross profit or gross loss. It provides a proxy for the performance of each housing market and highlights the magnitude of profit or loss the typical seller of a home makes across those regions analysed.
On a national level….
Over the June 2015 quarter, 9.1% of all homes resold recorded a gross loss when compared to their previous purchase price. This figure was slightly higher than over the March 2015 quarter (8.9%) and also slightly higher than the 8.6% recorded over the June 2014 quarter. Although the proportion of loss-making resales rose, the figure has been fairly steady over the past 12 months. Across those dwellings which resold at a loss over the quarter, the total value of loss was $411.3 million with an average loss of $65,585.
While 9.1% of resales were transacted at a loss, the vast majority (90.9%) of properties resold over the quarter did so at a profit. In fact, 30.8% of homes resold for more than double their previous purchase price. Across those homes which resold at a profit, the total value of this profit was recorded at $16.1 billion with the average gross profit recorded at $259,174.
The data also highlights the fact that ownership of property, whether for investment or owner occupier purposes, should be seen as a long-term investment. Across the country, those homes that resold at a loss had an average length of ownership of 5.3 years. Across all sales recording a gross profit the average length of ownership was recorded at 9.9 years, while homes which sold for more than double their previous purchase price were owned for an average of 16.4 years.
The capital city housing markets continue to record a lower proportion of loss-making resales than regional areas of the country. The trends in regional areas are shifting with the proportion of loss-making resales trending lower in areas linked to tourism and lifestyle. On the other hand, housing markets linked to the resources sector are generally seeing an increase in loss-making resales after housing market conditions in many of these locations have posted a sharp correction.
Details specific to Cairns…
The greatest pain for owners reselling last quarter was seen in:
Mackay, Queensland (46.6 per cent sold at a loss)
Fitzroy, Queensland (35.6 per cent)
Townsville, Queensland (34 per cent)
Outback, Western Australia (32.6 per cent)
Wilde Bay, Queensland (31.9 per cent)
Outback, Northern Territory (30.6 per cent)
Cairns, Queensland (25.3 per cent)
Wheat Belt, Western Australia (24.4 per cent)
South East, Western Australia (23.2 per cent)
Warrnambool and South West, Victoria (21 per cent)
As can be seen in the following graph, the Cairns market has been cycling back to an almost identical trend from 10 years ago.
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Jason Thomson | Mortgage Adviser and Finance Broker | Smartline Cairns