Resales

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<p><span>One of the Block Prahran Glasshouse apartments from last year’s season of The Block renovation series has been snappily resold.</span></p>
<p><span>It fetched $2.01 million, making a quick $285,000 gain in just eight months for investor Tina Brandi.</span></p>
<p><span>The three-bedroom apartment at 5/125 High Street was the one renovated in the group challenge where all five teams collaborated during the final Glasshouse episodes last October.</span></p>
<p><span>The apartment sold to a local businessman for $2.01 million through Biggin &amp; Scott Richmond agents Russell Cambridge and Allan Cove.</span></p>
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<p>The townhouse was sold a week after the show last October for $1.725 million. </p>
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jchancellor-FAypfDUnLy

Resale in the Prahran Block Glasshouse

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<p>EXPERT OBSERVER</p>
<p>CoreLogic’s recently released Pain and Gain report highlighted a growing divergence between houses and units for loss making resales. </p>
<p>Unit markets recorded a higher proportion of loss making resales relative to houses across every broad region of Australia over the June quarter.  </p>
<p>The latest CoreLogic Pain and Gain report provides a summary of gross profit and loss making resales across the country. The results show a consistent and long underperformance across the unit sector, and more recently, a growing divergence between the proportion of houses and units reselling at a gross loss. The June quarter report revealed that 14.3% of units that resold across the capital cities transacted at a gross loss; roughly double the rate of loss making house resales. Across the combined regional areas of Australia, loss making unit resales comprised 16.1% of transactions while a lower 10.3% of houses resold at a gross loss.</p>
<p>Every capital city and rest of state region across the country has seen the unit sector record a larger proportion of loss making sales across the unit sector compared with detached housing, however the differential is substantial in those cities where unit values have fallen more materially.</p>
<p>Across the capital cities, Darwin stands out as showing the highest proportion of loss making unit resales, with 71% of units reselling at a loss over the June quarter. Considering Darwin unit values have fallen 44% since peaking in May 2010, the high rate of loss on resales should come as no surprise; in fact Darwin unit values are back to the same level they were in February 2005. Darwin house values haven’t fall any where near as much, down 11% since peaking.  </p>
<p>Regional Western Australia has recorded the second highest level of loss making resales for units (56.7%) followed by Perth at 47.8%. Both regions have seen unit values fall substantially more than house values. Since peaking in January 2008, regional WA unit values are down 47.5% and are now back to levels seen in 1988. In Perth, unit values are 18.2% lower after peaking in July 2013 and are now worth the same value as they were in May 2006.</p>
<p>Amongst the capital cities, Brisbane also stood out for a high rate of loss making unit resales, with 29.2% transacting at a gross loss over the quarter compared with only 4.1% of houses selling at a gross loss. Brisbane unit values are back to where they were in August 2007 after declining by 10.8% from their 2008 peak.  </p>
<p>The lowest rates of loss making unit resales were in those regions where unit values have shown more buoyant conditions. Hobart recorded the lowest portion of loss making unit resales, with only 2.9% reselling at a gross loss over the June quarter. Hobart unit values are at a record high after recording solid capital gains over the past few years. It was only five years ago, after a long period of weak housing market conditions, when 25% of Hobart units were reselling at a gross loss.  </p>
<p>The Sydney unit market was showing the second lowest proportion of loss making unit resales over the June quarter. Despite rising levels of unit supply, only 3.5% of Sydney units resold at a gross loss over the quarter. Unit values are down 2.6% since peaking in November last year, and values remain 43% higher relative to five years ago. With a recent history of such strong capital gains, the vast majority of Sydney unit owners are still in a positive value position relative to their purchase price, however as values continue to slip lower and supply levels rise, we are likely to see loss making resales rise.</p>
<p>Click <a href="https://www.propertyobserver.com.au/images/2018/9/24/tim%20lawless%201.jpeg" target="_blank">here</a> to enlarge</p>
<p> <img src="https://www.urban.com.au/images/2018/9/24/tim%20lawless%201.jpeg" alt=""></p>
<p>There are a variety of factors that could be contributing to the higher proportion of loss making sales across the unit market. </p>
<p>For starters, units are more likely to be owned by investors. Around 68% of units are investor owned, 51% of townhouses are owned by investors and only 22% of houses.  CoreLogic Pain and Gain data shows investor owned dwellings have a higher propensity to resell at a loss which is probably attributable to the fact that investors can take advantage of taxation benefits such as offsetting their losses against future capital gains.  </p>
<p>Unit markets can be more prone to oversupply. This trend has been evident across the Brisbane and Melbourne inner city markets to different extents.  Focusing on some of the key inner city unit markets, Brisbane’s inner city recorded 32% of unit resales at a loss over the quarter and Melbourne’s inner city recorded 22% at a loss. Unit construction has been winding down across Queensland since late 2016, but remains at record levels across Victoria and close to record highs in New South Wales. With unit values now falling in Sydney and Melbourne and the pipeline at, or close to record highs, its likely that loss making resales will diverge further in these markets.</p>
<p>There is also the factor of the underlying land value. Even though dwelling values are sliding in some markets, land prices have generally held firm or continued to trend higher.  Detached houses have a stronger relationship with land values which is likely contributing to the long run trend of higher capital gains for houses relative to units.</p>
<p>Click <a href="https://www.propertyobserver.com.au/images/2018/9/24/tim%20lawless%202.jpg" target="_blank">here</a> to enlarge</p>
<p><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/2018/9/24/tim%20lawless%202.jpg" alt=""> </p>
<p><em>Tim Lawless <span class="s2"><em>heads up the CoreLogic RP Data research and analytics team</em></span></em></p>
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tlawless-5VLUrbAk9s

Unit owners are more likely to record a loss at sale: Tim Lawless

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<p><span>CoreLogic RP Data's most recent quarterly Pain &amp; Gain report - which provides a comprehensive list of where profits from properties were made over the March 2015 quarter - </span><span>noted that 30.7% of all homes resold for more than double their previous purchase price.</span></p>
<p><span>Across those homes which sold at a profit, the total value of this profit was recorded at $13.8 billion with the average gross profit recorded at $230,633.</span></p>
<p><span>Although the proportion of loss-making resales rose, the figure has been fairly steady over the past 12 months with the total value of the loss-making resales over the quarter recorded at $417 million, with an average loss of $69,468. </span></p>
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Average $230,633 profit for March quarter sales: CoreLogic RP Data

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<p><span>The amount of homes nationwide sold at a loss is lower than the post financial crisis peak, according to the recent<span> CoreLogic RP Data Pain &amp; Gain report</span>.</span></p>
<p><span style="line-height: 1.3em;">The report, covering the March 2015 quarter, found Perth and Darwin had a 'rapid' lift in the rate of loss-making resales over the last few months, noting this is similar in broader housing market conditions where rental rates are reducing and listings are rising.</span><span style="line-height: 1.3em;"><br></span></p>
<p><a href="/images/2015/06/23/700_pain1.jpg" target="_blank"><span style="line-height: 1.3em;">Click to enlarge</span></a></p>
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mick.cee-iDmgDDAmu8

National loss-making resales 'lower': CoreLogic RP Data

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<p><span style="line-height: 1.3em;">CoreLogic RP Data's Pain and Gain report for the June </span>quarter<span style="line-height: 1.3em;"> found capital city housing markets continue to record a much lower proportion of loss-making resales than regional areas of the country.</span></p>
<p><span style="line-height: 1.3em;">CoreLogic RP Data research analyst Cameron Kusher said 30.8% of resales earned a doubling in profits for owners over the quarter which was based on the previous purchase price of the dwelling, while the proportion of loss-making resales rose.</span></p>
<p><span style="line-height: 1.3em;"><span>"Across the country’</span><span>s regional areas, the analysis shows that proportion of loss-making resales is higher than those within the capital cities and trending lower in Regional NSW and fairly flat in most other areas except for Regional SA, Regional WA and Regional NT where loss- </span><span>making sales are trending higher,” he said.</span></span></p>
<p><span style="line-height: 1.3em;"><span>“The trends in regional areas are shifting with the </span><span>proportion of loss- making resales trending lower in areas linked to tourism and lifestyle.</span></span></p>
<p><span style="line-height: 1.3em;"><span>“</span><span>On the other hand, housing markets linked to the resources sector are generally seeing an increase in loss-making resales after housing market conditions in many of these locations have posted a sharp </span><span>correction.”</span></span></p>
<p>According to the report, d<span style="line-height: 1.3em;">wellings losses over the quarter amounted to $411.3 million; an average loss of $65,585 per sale. While 9.1% of resales were transacted at a loss, the vast majority (90.9%) of properties resold over the quarter did so at a profit and 30.8% of homes resold for more than double their previous purchase price.</span></p>
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Resale profit strong in capital city markets: CoreLogic RP Data

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<p><span>Sydney remains the only capital city where units had a lower level of resales at </span>a loss than houses over the June 2015 quarter, according to Core Logic RP Data's latest Pain &amp; Gain report.</p>
<p>The report found during the quarter 7.7% of houses and 12.6% of units were resold for less than their previous purchase price.</p>
<p>In the capital cities, 5% of houses and 8.4% of units were resold at a loss. Regional houses and units figures are 12.5% and 23.8% respectively.<span style="line-height: 1.3em;"> </span></p>
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Houses and units suffering resale losses: CoreLogic RP Data

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<p><span>Some 5.7% of sales across Melbourne over the June 2015 quarter were at a price lower than the previous purchase price.</span></p>
<p><span>This was down from 6.6% a year earlier and 6.4% at the end of the previous quarter, according to the recent CoreLogic RP Data Pain &amp; Gain report.</span></p>
<p><span>The Macedon Ranges, Mitchell and Murrindindi council areas were the only regions across the city to record no resales at a loss over the quarter.</span></p>
<p><span>The regions with the highest proportion of loss-making resales were Melbourne (20.0%), Stonnington (12.0%) and Moonee Valley (10.3%). </span></p>
<p><span>Melbourne CBD vendors lost $7 million in their sales that went backwards.</span></p>
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Melbourne CBD vendors lose $7 million in resales: CoreLogic RP Data Pain & Gain

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<p><span>Over the June 2015 quarter, 9.6% of Adelaide resales were at a gross loss, which was up from 9.3% at the end of the first quarter of 2015 but lower than the 10.9% over the same quarter last year.</span></p>
<p><span>The proportion of loss-making resales was relatively lower in the Prospect (2.0%), Holdfast Bay (2.7%) and Norwood Payneham and St Peters (2.7%) council areas, according to CoreLogic RP Data.</span></p>
<p><span>The highest proportions of loss-making resales over the quarter were recorded in Playford (28.3%), Mallala (20.0%) and Gawler (19.8%). </span></p>
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<p><span>Click to enlarge</span></p>
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Charles Sturt, Onkaparinga and Port Adelaide still feeling property pain: CoreLogic RP Data Pain & Gain

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<p><span>The largest difference in sales at a loss between owner occupiers and investors for the June quarter is in the ACT, according to CoreLogic RP Data, followed by Melbourne and Brisbane.</span></p>
<p><span>CoreLogic RP Data's Pain &amp; Gain report found 4.9% of capital city homes which were resold by owner occupiers were at a loss, with 8.3% of investor owned homes selling at a loss.</span></p>
<p><span>"The biggest discrepancy between sales at a loss for owner occupiers and investors was found in the ACT (7.2% vs 19.1%), Melbourne (3.2% vs 9.9%) and Brisbane (7.6% vs 12.3%)," it noted.</span></p>
<p><span style="line-height: 1.3em;">"Throughout the second quarter of 2015, 7.7% of owner occupiers and 11.9% of investors resold their properties at a loss. Across each capital city and rest of state market except for Darwin, the proportion of loss making resales was greater for investors than it was for owner occupiers.</span></p>
<p>"When it comes time to re-sell a property owner occupier stock is much more likely to turn a gross profit than investment stock. This is most likely due to the fact that investment is more prevalent in the unit market than detached houses. Arguably, transacting at a gross loss is easier for an investor to accept, as the loss can be offset against future capital gains." </p>
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