More gain than pain in property market, despite recent slowdown

by Julia Corderoy14 Jan 2015
The Australian property market may have hit its peak, but more than 90% of properties resold still made a profit according to recent data.

According to CoreLogic RP Data’s Pain and Gain report, 90.7% of resales in the September 2014 quarter – when the housing market began to cool – recorded a gross profit. Of this, 30.1% sold for double the price they were originally bought.

The percentage of resales that recorded a loss increased slightly over the September quarter, up from 9% in the June quarter to 9.3%. Although, this was much lower than the 11% gross loss recorded in the September 2013 quarter.

CoreLogic RP Data research analyst Cameron Kusher said the likelihood of making a gross profit is based on the length of time a property has been owned.

“A stark example of this is homes purchased prior to January 1st, 2008 (ie pre-GFC) and were subsequently sold during the September quarter of 2014. Only 5.2% of these resales made a gross loss. For homes purchased on or after January 1st, 2008, the propensity to make a loss on the resale climbs substantially. Homes that resold over the September 2014 quarter, 15.2% recorded a gross loss relative to the previous purchase price,” he commented.

Properties that recorded a gross profit were held for an average of 9.9 years, while those that incurred a gross loss over the September quarter were held for an average of 5.7 years. Homes that resold for more than double the previous purchase price were owned for an average of 16.8 years.