RP Data research: Where property sells for a profit
- News Limited Network
- March 21, 2014
- 3 comments
- New published research by RP Data
- Number of homes selling for a profit rising
- Best region for making a profit revealed
- Worst performing region also revealed
PROPERTY ownership has started to pay off big time with new figures revealing sellers raked in $15.2 billion in profits during the last three months of last year.The market is continuing to claw back lost ground with the number of properties selling for a profit on the increase.
New figures from RP Data reveal the number of profit making resales of properties throughout the country improved during the December quarter.
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The country’s best region for turning a profit was Victoria’s Loddon Shire region, followed by Sydney, Perth, Central Highlands in Victoria and the Darling Downs in Queensland.
HOUSING AS AFFORDABLE AS A DECASDE AGO
Queensland’s far north was the worst performer with 28.8 per cent of all sales during the December quarter for less than the owners originally bought. More than a fifth of property sales during the quarter in regional Queensland were at a loss.
Regional Western Australia also performed poorly with almost a fifth of sales at a loss.
Demand remained strong for properties within capital cities with only 6.5 per cent of those at a loss — the lowest level since mid 2011.
In Sydney, Melbourne and Canberra the proportion of loss making sales was highest for homes
resold between one and three years.
In Brisbane, Adelaide, Hobart and Darwin homes which resold between three and five years after purchase were most likely to sell at a loss.
In Perth, homes purchased between five years and seven years ago were the most likely to
sell at a loss over the quarter.
There were 74,595 properties sold during the last quarter of 2013 with only 9.7 per cent of those selling for less than the owners originally paid for them.
Losses in the December quarter totalled $457.3 million, which was an improvement on the previous quarter when 11.1 per cent of sales were at a loss.
The vast majority, 90.3 per cent, of sales during the December quarter were at a profit worth a total of $15.2 billion.
About a third of these owners at least doubled their money when they sold, but the average gross profit per sale was $225,088.
The average time to own a property before selling for a profit was 9.9 years, but if you want to double your money you need to live there for about 16 years.
RP Data research analyst Cameron Kusher said the likelihood of making a gross profit or loss was quite different based on the length of time a property was owned.
Homes bought before the Global Financial Crisis (January 1, 2008) which sold in the December quarter generally sold at a profit.
But 17.6 per cent of properties bought after that date and sold in December were for less than originally paid.
Mr Kusher said the results reflected the broader housing market trends at the moment.
“We are seeing values increase pretty much in all capital cities and a lot of regional markets as well,’’ he said.
“It does tend to reflect what we are seeing broadly but still on a historical basis the proportion of loss making sales is certainly elevated when compared to ten years ago.’’
Mr Kusher said the market appeared to be heading in the right direction, but the lifestyle market was still struggling a little.
“The lifestyle markets definitely are areas where we have seen the highest proportion of loss making sales, but again in those regions like the Gold Coast, Sunshine Coast, far north Queensland, south west Western Australia, although the proportion of loss making sales is still quite high it is trending down quite rapidly in those areas as well. Again that mirrors what we are seeing across those housing markets were we are now seeing some low levels of capital growth coming in.’’
“It just reiterates the long-term nature of investing in the housing market,’’ Mr Kusher said.
“I think what we have seen more recently is reflective of the market going forward, so people need to take a long-term view of buying property.’’
Mr Kusher said there had been a deterioration in performance in mining towns.
“Two quarters ago they were recording the lowest proportion of loss making sales, now certainly we have seen some escalation of loss making sales in areas like the Pilbara region, the Kimberley region, those mining areas in Queensland, Mackay and those sort of areas as well.’’
The best performing council area within greater Brisbane was the Brisbane City Council area, where 90.7 per cent of sales were at a profit.
In Sydney, 100 per cent of sales in the Burwood and Hunters Hill council areas were at a profit.
In Melbourne both Banyule and Knox council areas were the best performers with 97.9 per cent of sales in each area at a profit.
In Adelaide every sale in Walkerville council region was at a profit during the December quarter, while in Perth the Gosnells council area was the best performer with 98.8 per cent of sales at a profit.
Hobart was the best performing council region within Hobart with 89.6 per cent of sales at a profit, in Darwin it was the Darwin council area with 92.4 per cent of sales at a profit, and in the Canberra council region 92.6 per cent of sales were at a profit.
WHERE THE PROFITS ARE
Regions with lowest proportion of loss making resales
LODDON (Vic) (2.1%)
SYDNEY (NSW) (3.6%)
PERTH (WA) (4.3%)
CENTRAL Highlands (Vic) (4.3%)
DARLING Downs (Qld) (4.8%)
BARWON (Vic) (4.9%)
WIMMERA (Vic) (6.0%)
Melbourne (Vic) (6.0%)
ILLAWARRA (NSW) (6.3%)
GIPPSLAND (Vic) (6.3%)
Source: RP Data