Home short-term loss-making resales up

The portion of loss-making short-term resales across the Australian housing market has grown to 9.7%, compared to only 2.7% a year ago, despite a general improvement in profitability of home sales, according to CoreLogic.

Following this, the data confirmed an unusually high portion of short-held regional properties, which were sold in the year to June 2023, and might indicate that regional owners were selling up after “a short stint of tree change or sea change.”

The highest concentrations of short-term resales took place in regional Queensland and included Wide Bay (17.3%), the Gold Coast (15.2%) and the Darling Downs – Maranoa region (14.4%).

“This suggests that people might be selling up after trying to live, or invest, in more remote regional or lifestyle areas,” CoreLogic Head of Research and report author Eliza Owen noted.

According to her, a deeper dive into the performance of resales within a two-year period also highlighted more pain for recent home buyers.

“Two years is a significant time period because we are two years on from the height of pandemic-related lockdowns, low interest rates, and have just passed the peak of transitions from low fixed rates to high variable rates,” she said.

“Of the loss-making resales held for up to two years, the median loss was $30,000, compared to a median profit of $75,000 for nominal gains within the same hold period. Houses made up 66% of short-term, loss-making resales, and 63.3% were in capital cities.”

Owner occupiers have incurred the most short-term nominal losses at 72.1%, as opposed to 27.9% by investors, a similar split to the portion of overall resales in the June quarter.

At the same time, CoreLogic’s data found that, outside of short-term resales, the high level trends in profit-making sales broadly showed an improvement.

Owen said both houses and units saw an increase in the level of profit-making sales nationally, though unit sellers incurred a nominal loss from resale around four times larger than house sellers.

As far as “Pain & Gain outlook” was concerned, CoreLogic’ report said that profitability was expected to rise with home values.

“The rate of profit-making sales tends to follow capital growth trends. With home values continuing to rise through July and August, we estimate the level of profitability from resales will also move higher through the September quarter,” Owen added.