A new report has revealed the regions where vendors are most likely to have lost or made money on their property come sale time.
The new RP Data Pain and Gain national report for the June 2013 quarter has revealed the cities around the country that have made a profit or a loss.
It recorded 69,390 residential property resales nationally over the three months and of these, 12 per cent recorded a gross loss from the original purchase price. The gross value of the losses totalled $530.7 million.
However, 88 per cent of all resales over the June quarter of 2013 made a gross profit of $12.1 billion.
RP Data research analyst Cameron Kusher said the largest proportion of the losses were in lifestyle markets such as Queensland’s Gold Coast, with units suffering the greatest losses.
According to RP Data, 36.3 per cent of all June quarter resales transacted at a price lower than that which the home was purchased for were sold on the Gold Coast.
Mortgage broker Rebekah Gould from Smartline Gold Coast told The Adviser the region has been doing it tough in terms of valuations but she has seen a distinct pickup in buyer activity in recent months.
“There is a lot more confidence in the market, people are out and about finding property, with the lower end of the market in particular selling a lot quicker than before,” she said.
“Over the last six months I have noticed that there has been a gradual increase in activity, but it’s probably in the last three months that the increase has been really noticeable,” added Ms Gould.
Meanwhile, regional areas associated with the resources sector recorded strong resale conditions, with Queensland’s Central West, Victoria’s Barwon and Central Highlands regions, and Perth all recording less than six per cent of June quarter transaction losses.
Across the capital cities, the lowest proportion of loss was recorded in Perth (5.0 per cent), Sydney (6.2 per cent), Canberra (6.2 per cent) and Melbourne (8.1 per cent).
Hobart suffered the most pain with an 18.5 per cent loss.
Mr Kusher said the likelihood of making a gross profit or loss was quite different and was based on the length of time a property had been owned.
“As a stark example, of homes that were purchased prior to 1 January 2007 (pre-GFC) and were then sold during the June quarter of this particular year, only 7.2 per cent of resales made a gross loss. However, for homes purchased on or after this date, the propensity to make a loss on the sale climbed substantially," he said.
“If you look at those properties that sold at a loss over the quarter, they had an average hold period of just five years. This highlights the long-term nature of investment in residential property and that if you chase short-term profits you are likely to be more susceptible to losses,” Mr Kusher said.