Property Flip

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<p>After just 20 months ownership, the test cricket legend Shane Warne seems to have profited handsomely from flipping his Melbourne home.</p>
<p>It was the heritage Brighton trophy home he bought in August 2016 for $14.2 million and sold last month for a reputed $20 million.</p>
<p>The spin king's off market sale was flipping at its best.</p>
<p>Flipping is a popular term used to describe short term property trading.</p>
<p>Perhaps Warne didn't have the intent of reselling the property in a short time frame for a profit, but he certainly knew how to ride the capital growth curve.</p>
<p>Without any marketing photos it's not possible to confirm the before and after, but it doesn't appear he spent much adding value to the property second time around.</p>
<p>That was done when he owned Melville the first time, paying $3.6 million in 2000, then spending that amount again on a major renovation and extension, and selling the matrimonial home in 2007 for $8.8 million.</p>
<p>Property analysts, CoreLogic which now produce a flipping report, found flipping most prevalent in Sydney and Melbourne.</p>
<p>Across Sydney 6.8 per cent of all property re-sales over the past year were flips between one and two years of property ownership.</p>
<div>Regional Queensland (6.6 per cent) and Melbourne (6.4 per cent) also recorded a higher percentage of property sales as flips.</div>
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<div>Although values have been rising there had not been an accompanying substantial increase in flipping behaviour.</div>
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<div>Certainly not like the rise witnessed during the early 2000s housing boom.</div>
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<div>But when Sydney vendors do flip, they are in most instances flipping for a profit. </div>
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<div><span>In Sydney, only 5.7 per cent of flips within one to two years of purchase were at a loss, compared to 37 per cent a decade or so ago. </span></div>
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<div><span>At close to 95 percent, regional NSW last year recorded the highest percentage of flips at a profit within one to two years of purchase, followed by Sydney (94 percent) and Melbourne (93 percent).</span></div>
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<div>The national average was 89 percent.</div>
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<div>Interestingly it was the Illawarra region that experienced the highest level of flips in NSW - 8.7 per cent of resales - along with the highest annual increase in flipping - and Illawarra was among the most profitable regions in NSW, with only around two per cent of properties flipped at a loss.</div>
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<div><span>The NSW Southern Highlands and Shoalhaven regions also saw profits, actually recording no losses for flips less than a year, and just 0.9 per cent from one to two years.</span></div>
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<div>In order to make a profit, flippers need to recoup their transactional costs including stamp duty, conveyancing, the marketing and real estate agent commission.</div>
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<div>Vendors in Perth, Hobart, Darwin, and the regions of SA, WA, Tasmania and the NT were the most likely to flip their properties for a loss, given value growth has been sluggish for a number of years.</div>
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<div>This article was first published in the Saturday Daily Telegraph.</div>
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jchancellor-FAypfDUnLy

New South Wales showing strong flipping figures

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<p><span>Over the 12 months to June 2017, 3,861 dwellings were sold after having been held for less than a year nationally with a further 16,749 resold after being owned for between one and two years, according to CoreLogic.</span></p>
<p><span>These figures represented 1.3% and 5.7% of all resold property sales over the year. </span></p>
<p><span>Flipping remains a small proportion of the overall housing market however, flips between one and two years have been trending higher over recent times. </span></p>
<p><span>In its heyday in the early 2000s, 4.4% of all properties were flipped in less than 12 months and 16% were flipped between 12 and 24 months from previous purchase. </span></p>
<p><span>What is surprising is that the introduction of the capital gains tax discount for investors that held properties for more than 12 months in 1999, made little difference to flipping behaviour.</span></p>
<p>Click here <a href="https://www.propertyobserver.com.au/images/2018/1/19/flipping-by-state.jpg" target="_blank">to enlarge.</a></p>
<p><span><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/1/19/flipping-by-state.jpg" alt=""></span></p>
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<p><span>In fact, the incidence of flipping didn’t rise substantially until the national housing market boomed between 2001 and 2004. </span></p>
<p><span>Focusing solely on those properties which are ipped, the data shows that most of these properties are selling for a gross profit. </span></p>
<p><span>Over the 12 months to June 2017, 10.9% of flips held for less than 12 months were at a loss and 10.1% of flips held for between 12 and 24 months resold for a loss. </span></p>
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<p><span>Although the proportion of flips at a loss has declined from recent highs in 2009 and again in 2012, there has been a clear increase in loss-making flips recently. </span></p>
<p><span>The rising number of loss making flips highlights there is some financial risk in flipping, keeping in mind that the proportion of </span>loss making flips on a net basis is likely to be substantially higher once expenses are taken into account.</p>
<p><span>Across the major regions of the country, flipping was more prevalent in Sydney, Melbourne and Regional QLD.</span></p>
<p>Darwin was the <a href="https://www.urban.com.au/expert-insights/buying/79310-buying-discounted-property-in-australia-s-weakest-capital-city" target="_blank">weakest capital city</a> for prices in 2017.</p>
<p>Its resale losses have also been a <a href="https://www.urban.com.au/expert-insights/buying/64550-darwin-property-resales-at-loss-highest-in-palmerston-corelogic-pain-and-gain" target="_blank">problem in recent years.</a></p>
<p>The propensity to flip in Sydney and Melbourne is likely due to the strong run-up in values over recent years whereas regional QLD is probably seeing greater propensity to flip as people struggle to meet mortgage repayments as unemployment has risen and dwelling values have fallen.</p>
<p><span>Vendors in Perth, Hobart, Darwin, regional QLD, regional SA, regional WA, regional TAS and regional NT were the most likely to ip their properties for a loss. </span></p>
<p><span>In most of these regions value growth has been sluggish for a number of years which makes flipping for a profit much more difficult. </span></p>
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