Loss-making property sales are rising, and are their highest in Melbourne in almost 25 years and in Sydney since 2009.Unit owners were more likely to sell at a loss than house owners.
CoreLogic Australia’s head of research Eliza Owen said the majority of homes still sold for a substantial gain, but the level of profitability had declined with the market downturn, and deteriorated at a faster pace in the first quarter – despite a stabilisation in prices.
Investors and high-density markets were particularly hard hit as a result, with investor resales three times more likely to be at a loss than owner-occupier sales. In Sydney, the highest proportion of loss-making sales was in the Strathfield , Botany Bay , Burwood and Parramatta regions. While property prices were rebounding, it was unclear how long this could last, Oliver said. This, combined with the continuing rise in interest rates, and a growing risk of recession, which would lead to job losses, meant the proportion of homes resold at a loss could climb.
Barrenjoey senior economist Johnathan McMenamin said the increase in short-term hold periods was probably a reaction to the sharp lift in interest rates, which were likely to go higher, and remain elevated for longer, than people had expected.