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.”