Bummer: Investors more likely to resell at a loss

By Lucy Dean

March 21 2018
Share

Australian property investors are more likely to resell their properties at a loss than their owner-occupier counterparts, new figures show.

investors more likely to resell at a loss

CoreLogic’s latest quarterly Pain & Gain report reveals that in the December 2017 quarter, 11.3 per cent of investor owned properties resold at a loss.

That’s compared with 7.5 per cent of owner-occupiers.

Sydney was the only major region in which owner-occupiers were more likely to resell at a loss, while Melbourne investors were four times more like to resell at a loss than their owner-occupier counterparts.

Investors in regional settings (15.3 per cent) copped higher rates of losses than their capital city counterparts (9.3 per cent), as did owner-occupiers, with 9.8 per cent reselling at a loss in regional areas, compared with 6.1 per cent of capital city owner-occupiers.

Regional Western Australia was the worst area for loss-making properties for both investors (47.5 per cent) and owner-occupiers (32.5 per cent).

This was followed by Darwin, with 33.6 per cent of investor-held properties reselling at a loss compared with 29.9 per cent of owner-occupier properties.

Melbourne was the most owner-occupier friendly city, with only 1.4 per cent of properties reselling at a loss, while Sydney was the most comfortable for investors, with only 1.7 per cent reselling at a loss.

CoreLogic research analyst Cameron Kusher said, “Clearly, any property owner will aim to make a profit from the sale of their property.

“In a falling market, owner-occupiers may be more prepared to sell at a loss if they are purchasing their next home at an equivalent or greater discount. Meanwhile, investors, because of taxation rules, would seemingly be more prepared to incur a loss because they, unlike owner-occupiers, can offset those losses against future capital gains.”

Continuing, he said that should home values soften, investors could be more likely to sell at a loss and offset those losses with tax structures.

This, in turn could mean greater supply in a period of falling demand, Mr Kusher continued.

“More up-to-date dwelling value data has shown that in most capital cities dwelling values have been falling over recent months while regional values have continued to increase, albeit at a slower pace,” he said.

“These trends are expected to continue in 2018 and given that it should be expected that the proportion of properties reselling at a profit may begin to reduce over the coming quarters.”

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

Most read

Age Pension increase prompts Australians to review their finances

Latest Podcast

Superannuation guarantee rate rises to 12 per cent as parental leave changes ...

Resources

There is $17.5 billion in lost and unclaimed super across ...

Invest