How to avoid resale pain

Anyone reselling their property wants to make a profit on the sale, but it always helps to know which areas are recording high rates of loss-making resales and vice versa.

The good news is that the bulk (90.2%) of resales over the March quarter recorded a gross profit relative to their original purchase price, according to the latest RP Data Pain & Gain report.

Conversely, this does mean that 9.8% of resales over the same period recorded a gross loss relative to the original purchase price.

RP Data research analyst Cameron Kusher said the areas which experienced the greatest resale losses were lifestyle regions.

“These areas continue to show the largest proportion of loss making resales, particularly within the unit markets as opposed to detached housing markets.”

The areas which recorded the biggest proportion of loss-making resales were:

  • Wide Bay (Qld): 30.6%
  • Townsville (Qld): 28.5%
  • Cairns (Qld): 28.2%
  • Gold Coast (Qld): 25.6%
  • Mackay (Qld): 23.3%
  • Sunshine Coast (Qld): 23.2%
  • Richmond -Tweed (NSW): 22.3%
  • West and North West (Tas): 20.2%
  • Wheat Belt (WA): 19.9%
  • South-East (SA): 19.8%

Loss-making resales were still a relatively high proportion of the market but Kusher said that, in many regions, the proportion of such sales was trending lower.

Overall, loss-making resales were down from 9.4% a year ago across capital cities and down from 18.2% in regional markets.

Meanwhile, capital cities and regional areas associated with the agricultural sector were performing well and recorded lower rates of loss making resales, Kusher said.

The areas which recorded the lowest proportion of loss-making resales were:

  • Sydney (NSW): 3.0%
  • Bendigo (Vic): 3.1%
  • Illawarra (NSW): 3.1%
  • Geelong (Vic): 3.2%
  • Newcastle and Lake Macquarie (NSW): 3.9%
  • Toowoomba (Qld): 4.5%
  • Perth (WA): 5.0%
  • Central West (NSW: 5.5%
  • Ballarat (Vic): 5.6%
  • Central Coast (NSW): 6.6%
  • Darwin (NT): 6.6%

Kusher said the likelihood of making a gross profit or loss from housing investment tends to be affected by the length of time a property has been owned.

Not surprisingly, properties that were only held for a short period of time were much more susceptible to loss.

Almost 20% (19.4%) of properties resold between three to five years sold at a gross loss.

However, 54.8% of properties re-sold between 10 and 15 years sold for double the purchase price, while 95% of re-sales after 15 years sold for over double the initial purchase price.

“The long-term nature of housing investment means that if you buy and sell over a shorter period of time you are going to be much more susceptible to loss than if you have a long-term hold strategy,” Kusher said.

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