THE TWEED property market continues to strengthen whilst profits from sales are reducing nationwide and in neighbouring regional markets.
The Pain and Gain Report released by CoreLogic this week is a quarterly analysis of residential properties which were resold over the quarter. It compares the most recent sale price to the previous sale price in order to determine whether the property sold at a gross profit or gross loss.
The report provides a proxy for the performance of each housing market and highlights the magnitude of profit or loss a typical seller makes.
Nationally over the June 2016 quarter, 9.5 per cent of all dwellings resold recorded a gross loss when compared to their previous purchase price. This figure was higher than the 9.3 per cent at the end of the first quarter this year and the highest proportion recorded since March 2014.
Although the instance of loss-making resales has increased, the vast majority of homes continue to sell for prices above the previous purchase price. The split between resales of capital city and regional homes shows that the proportion of loss-making resales is much lower in capital cities (7.1 per cent) than in regional areas (14.1 per cent).
Houses are seeing a proportionately lower number of loss making resales compared to units both across the combined capital cities and combined regional areas of the country. The proportion of houses resold at a loss across the combined capital cities has increased over the past quarter while unit resales at a loss have remained steady.
In regional areas the proportion of resales at a loss is at the highest level since the three months to July 2015. Homes that sell for less than their previous purchase price are on average held for a shorter length of time than those reselling for a profit which highlights the long-term nature of housing investment.
The regional housing markets recorded $139,475,875 worth of house resales at a loss over the June 2016 quarter and $68,199,797 units resold at a loss over the quarter.
The average losses were recorded at $64,423 for houses and $61,944 for units.
For resales turning a profit in regional Australia over the quarter to June 2016, there were $2,400,837,922 in realised profits for houses and $475,731,130 in profit for units. The average profits were recorded at $154,773 for houses and $107,680 for units.
The trends in regional areas are shifting with the proportion of loss-making resales trending lower in most areas linked to tourism and lifestyle. On the other hand, housing markets linked to the resources sector are generally seeing an elevated level of loss-making resales after housing market conditions in many of these locations have posted a sharp correction
Increased demand for coastal housing
MORE RECENTLY, demand for coastal housing markets throughout the country have increased.
Across the major regions the proportion of homes resold at a loss over the June 2016 quarter was: 2.1 per cent in Illawarra, 2.1 per cent in Newcastle and Lake Macquarie, 9.8 per cent in Richmond-Tweed, 9.5 per cent in Mid North Coast, 4.3 per cent in Geelong, 28.2 per cent in Bunbury, 25.0 per cent in Cairns, 13.0 per cent in Gold Coast and 12.2 per cent in Sunshine Coast.
Although some of these regions have seen an increase in loss-making resales over the past quarter, each region other than Cairns and Bunbury has recorded a fall in the proportion of loss making resales relative to a year ago.
Many of these regions are seeing resales at a loss fall as housing demand increases leading to rises in home values.
In Richmond-Tweed, Mid North Coast, Gold Coast and Sunshine Coast the proportion of loss-making resales is now substantially lower than peak levels of a few years ago.