Regions better than cities for property profits: CoreLogic

More homes sold at a premium through the September quarter, but the value of losses also deepened, says a new report.

Units were proved two times more likely to sell at a loss in the September quarter. Picture : Nicki Connolly

Regional property owners secured more sales at a premium when selling their homes through the September quarter than those in the capital cities, according to a new report by property researcher CoreLogic.

But while the portion of properties sold through the September quarter of 2020 fell, the value of loss rose past $1bn.

CoreLogic’s latest “pain and gain” report found the proportion of resales that made a profit nationally over the three month period reached 88.1 per cent, equivalent to $24.8 billion, up from 87.2 per cent in the June 2020 quarter.

Losses deepened on non-profitable sales between the two quarters by $319m, to $1.2bn in September.

CoreLogic’s head of research, Australia, Eliza Owen said the report reflected the resilience seen in the property market through the pandemic, with regional lifestyle areas near the coast proving popular.

“Each of the greater capital city markets, with the exception of Melbourne, saw an increase in the rate of profit-making sales over the September quarter,” Ms Owen said.

“The highest rate of profit-making sales was across Hobart, which has been the case since March 2018.”

Coastal regional markets were also particularly profitable for sellers, with profit-making sales representing over 95 per cent of resales across six major coastal markets: Geelong, Illawarra, the Mid North Coast, the Newcastle Lake Macquarie region, the Richmond Tweed region and the Sunshine Coast.

Comparing the capital cities to regional Australia, the portion of profit-making sales increased more rapidly across the regions than capitals, reaching 89.2 per cent and 87.2 per cent respectively.

The fall in demand for apartments, particularly in the inner city markets of Melbourne and Sydney, meant units were about two times more likely to sell for a loss than houses in the September quarter. Houses generally had a higher rate of return ($225,000) than units ($125,000).

Property investors were revealed to be more likely to have sold at a loss (17.1 per cent) compared with owner-occupiers (10.4 per cent).

The report analysed approximately 72,000 property resales over the three months to September. The median time owners held their property was around 8.5 years. For profit-making sales, the median sat at nine years, while loss-making sales were typically held for 6.7 years.

“For houses and units, typical hold periods were longer across profit-making resales,” says Ms Owen.