RP Data’s quarterly Pain and Gain report for December 2013 shows the gross value of these losses totalled $457.3 million. The average loss for the negative transactions was $63,215.
On the flip side, 90.3 per cent of all December 2013 quarter resales recorded a gross profit relative to their original purchase price, with gains from these activities totalling $15.2 billion. In addition, 31.8 per cent of all resales at least doubled their price from purchase to sale. The average gross profit per transaction for these sales was $255,088.
Lifestyle regions continue to show the largest proportion of loss-making resales, particularly within unit markets, according to the report.
Queensland’s far north recorded the largest proportion of loss-making resales, with 28.8 per cent of resales in the quarter transacting at a price lower than the home was originally purchased for.
The report also noted regional areas often associated with the agricultural sector and most capital cities recorded very low rates of loss-making resales.
The report said the likelihood of making a gross profit or loss is quite different based on the length of time a property has been owned.
“As a stark example, of those homes that were previously purchased prior to 1 January 2008 (i.e. pre-GFC) and were subsequently sold during the December quarter of 2013, only 5.5 per cent of resales were made at a gross loss,” the report reads. “For those homes that were purchased on or after 1 January 2008 the propensity to make a loss on the sale climbs substantially.
“To further illustrate this point, for those resales that incurred a gross loss over the December quarter, their average length of ownership was just 5.3 years. Properties that recorded a gross profit were held for an average of 9.9 years, while those homes that recorded a gross profit of more than 100 per cent of the previous purchase price were owned for an average of 16.2 years.”