Homeowners selling property below purchase price,
New data shows Australian homeowners were more likely to make a profit if they sold their homes in the September quarter.
However, the overall national improvement is driven by a property boom in Perth and Brisbane, masking weakness in Sydney and Melbourne.
Where property owners are selling at a loss
| LGA | Loss-making sales, % | Median loss, $ |
|---|---|---|
| Sydney | ||
| Parramatta | 22.8% | -$50,000 |
| Strathfield | 20.9% | -$50,000 |
| Ryde | 20.9% | -$45,000 |
| Burwood | 19.2% | -$51,000 |
| Cumberland | 12.0% | -$29,056 |
| Melbourne | ||
| Melbourne | 43.7% | -$60,500 |
| Stonnington | 32.6% | -$50,000 |
| Yarra | 20.0% | -$35,500 |
| Port Phillip | 20.8% | -$35,000 |
| Maribyrnong | 17.8% | -$30,000 |
The rate of profit-making sales reached 95 percent in the September quarter, increasing from 94.5 percent in the prior quarter.
CoreLogic’s Pain and Gain report for the September quarter, released on Wednesday, revealed this significant rise in profit-making sales.
National home values also increased by 0.8 percent during the quarter, contributing to the overall positive trend in the market.
Meanwhile, the rate of loss-making resales decreased to 5 percent, marking the lowest level since March 2008.
This decline was primarily driven by the unit market, where loss-making sales dropped to 9.4 percent in September.
This marked a decrease from 10.8 percent in the previous quarter, reflecting improvement in the overall unit market performance.
It is also a significant drop from the recent high of 15.2 percent seen in the March quarter of 2023.
Perth experienced the largest quarterly decline in the rate of loss-making unit resales across the capital cities, nearly halving.
In Perth, the rate fell from 11.6 percent to 6.4 percent, as unit values increased by 5.1 percent.
In contrast, in Sydney, 88.7 percent of units and 98.5 percent of houses made a profit, reflecting strong performance.
The local government areas with the highest rate of loss-making sales were Parramatta, Strathfield, Ryde, Burwood, and Cumberland.
These areas, all with pockets of high density, saw loss-making sales rates of 22.8 percent, 20.9 percent, and 19.2 percent, respectively.
Despite Melbourne’s downturn, profitability remained strong for 90.1 percent of sellers in the city, reflecting ongoing market resilience.
However, this also meant that Melbourne had the highest incidence of loss-making sales, outside of Darwin, at 9.9 percent.
The apartment-dense City of Melbourne had the highest rate of loss-making sales, with 43.7 percent in the three months.
It was followed by Stonnington, where 32.6 percent of homes sold at a loss, indicating challenges in the market.
Additionally, Yarra, Port Phillip, and Maribyrnong experienced significant loss-making sales, with rates of 20 percent, 20.8 percent, and 17.8 percent respectively.
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While the national gap between loss-making sales of houses and units is narrowing, units remain three times more likely to sell at a loss.
Only 2.9 percent of house vendors sold for a loss, compared to 9.4 percent of unit sellers, reflecting this disparity.
CoreLogic’s head of Australian research, Eliza Owen, explained that the increase in home values helped reduce the rate of loss-making sales.
She highlighted that this was particularly evident in some unit markets, where profitability was on the rise.
“The decline in loss-making sales comes from ongoing increases in national home values,” Owen explained, emphasizing broader market trends.
“It’s because the unit market is becoming more profitable,” she added. “It’s growing faster, and in the three months to September, it overtook the house market.”
Owen suggested that demand might be shifting toward the unit sector, as houses have become increasingly out of reach for many buyers.
She noted that despite the softening of the market, most sellers were well-positioned to make a profit on their homes.
“Even though there are signs of housing market conditions easing, this data shows that sellers are generally well off,” Owen said.
In fact, more sellers were making a profit from resale, marking the highest level in 16 years, according to her.
However, she pointed out that most of the loss-making sales were from units, not houses.
The other group of sellers who traded at a loss were those who had held their properties for between two and four years.
“This is the part that creates a pain point and highlights the lasting impact of short-term fixed loans,” Owen said.
She explained that these loans were priced very low during the pandemic, but now the terms are expiring.
“This September quarter marks three years since that point, and people are now facing much higher mortgage costs,” she continued.
Owen noted that this shift has caused a significant bump in the number of sales in the market.
Ray White’s chief economist, Nerida Conisbee, explained that fewer units sold at a loss because demand for them grew this year.
“Demand for apartments increased due to very low supply levels in the market,” Conisbee said, noting strong market conditions.
She observed that on the Gold Coast, demand has lifted across all price points, including both luxury and affordable apartments.
“Even luxury apartments have increased in price, but so have the more affordable holiday apartments,” she explained.
Conisbee also mentioned that profit-making sales varied across the country, particularly in markets like Melbourne, reflecting regional differences.
“Perth is experiencing conditions similar to south-east Queensland, where the market is doing very well,” she said.
She added that Perth’s small unit market, coupled with limited development, has contributed to strong price growth.
