03 July 2013 Majority of homes sell for profit


More than 80 per cent of all homes that sold in the first quarter of 2013 sold for a profit, new research has revealed.

Statistics provided by RP Data’s research director, Tim Lawless, indicate 87.3 per cent of homes sold for a profit, while just 12.7 per cent of all March quarter re-sales transacted at a loss.

Mr Lawless said the lower interest rate environment appears to be creating an increase in consumer confidence across the property market.

“We’re now seeing a lot more activity around sales compared with this time last year,” he said.

RP Data recorded 58,677 residential property re-sales nationally over the first quarter; of these, 12.7 per cent recorded a gross loss from the original purchase price, representing a total loss value of $463.9 million over the quarter.

Conversely, 87.3 per cent of all March quarter re-sales recorded a gross profit when compared with their original purchase price, with this total profit coming to $9.6 billion.

Units in 'lifestyle' locations such as Queensland’s Gold Coast region experienced the largest re-sale losses, with 37.1 per cent of all March quarter re-sales in the area transacting at a loss.

For regional areas, particularly those associated with the resources sector, Mr Lawless said there were much fewer re-sale losses.

Queensland’s central west, Victoria’s Loddon region, and the Kimberley and Pilbara regions of Western Australia all recorded fewer than 5 per cent of March quarter transactions at a loss.

“The likelihood of making a gross profit or loss is quite different based on the length of time a property has been owned,” Mr Lawless said.

“As a stark example, of those homes that were previously purchased prior to 1 January 2008, and were subsequently sold during the March quarter of this year, only 8 per cent of re-sales were made at a gross loss.

“For those homes that were purchased on or after 1 January 2008, the propensity to make a loss on the sale climbs substantially. Of those homes that sold over the March quarter, 25 per cent recorded a gross loss relative to the previous purchase price.”

The average length of ownership for properties that incurred a gross loss over the March quarter was just 4.8 years.

Properties that recorded a gross profit were held for an average of 9.7 years, while those homes that recorded a gross profit of more than 100 per cent were owned for an average of 15.4 years.

Reproduced in full with permission: TheAdviser Majority of homes sell for profit 21 June 2013

Attention: This article is intended to provide general information only. Every attempt has been made to ensure the accuracy of this information at the date of publication. The opinions expressed in this article do not reflect those of DHA, its staff or agents. Property prices are subject to fluctuation. Prospective investors should seek independent advice. DHA will not be liable for any loss, damage, cost or expenses incurred or arising by reason of any person relying on information in this article.
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