More than one in ten apartment sales nationally was sold for a loss over the March 2016 quarter, figures from CoreLogic have revealed.
According to CoreLogic’s latest Pain and Gain Property Report, 12.4% of apartments resold at a loss over the first quarter of the year. In the capital cities, 9.4% of apartments resold at a loss whilst one in five (19.2%) of apartments in regional areas resold for less than what they were purchased for.
Sydney was the only capital city or regional housing market in which units had a lower proportion of resales at a loss (1.9%) than houses (2.2%) over the quarter. Across most other regions, the differential in loss-making resales between houses and units was quite substantial.
In Melbourne, Brisbane, Regional Northern Territory and the Australian Capital Territory, units were more than twice as likely than houses to resell at a loss.
According to CoreLogic, the higher proportion of loss-making resales for units is reflective of the fact that house values have historically increase at a more rapid pace than units. It also reflects the fact that units are much more likely to be owned by investors than owner occupiers.
The ability for investors to offset losses against future capital gains while owner occupiers can’t means that investors are more likely and better able to deal with losses on resales of residential properties than owner occupiers, the report said.
However, this is still concerning given the current apartment oversupply debate hanging over Australia's eastern seaboard capital cities.
Looking at the housing market, 7.9% of houses nationally resold at a loss. In capital cities, this figure was 5.8% whilst in regional housing markets, 11.2% of houses sold for less than they were bought for.
In the housing and apartment market combined, 9.2% of homes resold recorded a gross loss on previous purchase price, up from 8.3% at the end of 2015 and also higher than the 8.8% recorded 12 months ago.
The total value of dwellings which resold at a loss over quarter was $362 million, with an average loss of $66,073.