Nine in 10 resales gained profit in Q1 2017

In the quarter ending March 2017, just 9.6 per cent of dwellings sold for less than their previous purchase price, the latest CoreLogic Pain and Gain report reveals.

The median profit gained was around $185,000 while the median loss experienced was $35,000.

While the gross profit from resales came in at a whopping $20.9 billion, the proportion of dwellings sold at profit was slightly down from the previous period.

The rate of houses resold at a loss rose from 5.1 per cent in the December 2016 quarter (and 5.1 per cent in the prior comparative period) to 8.1 per cent, while the rate of resell losses for capital city units grew from 10.1 per cent (and 9.8 per cent in the prior comparative period) to 11.5 per cent.

However, the proportion of regional units reselling at a loss dropped to its lowest figure (17.2 per cent) since the December 2010 quarter, down from 17.9 per cent in the December 2016 quarter.

Since 1997 there hasn’t been a quarter where the percentage of houses reselling at a loss was higher than the percentage of units, CoreLogic statistics show.

The phenomenon has occurred because the value of a house is attached to the underlying land value, but the value of a unit is linked to location, CoreLogic’s head of research Cameron Kusher explained.

“The unit sector is more prone to over supply which is another factor that is likely weighing down the resales performance.”

“While the proportion of loss making sales has started to reduce in some of these regions, there remains a high willingness from home owners to sell up coupled with little demand to purchase. As a result we are seeing a high proportion of vendors materialising their losses,” Mr Kusher said.

[Related: Fall in home-ownership not surprising, says CoreLogic]