According to the latest property market data, Australian homeowners who purchased homes in recent years face an increasing risk of losses if they sell short-term. A new report from real estate data analytics firm CoreLogic shows that in the September 2023 quarter, the percentage of sellers nationwide who had owned their properties for three years or less saw a slight increase in losses to 6.61 per 3T. This is higher than the 6.51 per 3T recorded in June of the previous quarter and significantly higher than the 3.61 per 3T recorded in the same period last year.
While real estate is typically a long-term investment, rising interest rates and increased mortgage stress this year have seen an increase in the proportion of short-term resales. CoreLogic's "Pain and Gain Report" shows that both short-term and long-term sellers are experiencing significant gains. This quarter, 93.51% of all residential resales resulted in a profit, slightly higher than the 92.91% in the June quarter. Overall, the proportion of houses sold with a profit was 96.81%, higher than the 87.41% of apartments sold.
In Sydney, the highest percentage of loss-making sales was in the Ryde City area, at 24.21 per 3T, followed by Burwood, Strathfield, and Parramatta. These areas have a high supply of high-density housing, leading to a higher proportion of loss-making properties. In Melbourne, over 20% of properties were sold at a loss, particularly in the Melbourne City Council area, where the rate was as high as 41.11 per 3T, followed by areas like Stonnington and Boroondara.
According to research from the Australian Productivity Commission, building more housing can improve housing affordability. Economist Dr. Diaswati Mardiasmo stated that while Australia as a whole experiences a housing shortage, the shortage is greater in the house market than in the apartment market. She noted that when homeowners see falling apartment prices, particularly in CBD areas, they may decide that holding onto their properties is not financially viable.
ANZ senior economist Adelaide Timbrell noted that while most Australian homeowners can afford their mortgages, some may still sell to alleviate financial pressures. Analysis from the Reserve Bank of Australia shows that most people can afford their mortgages and other expenses without dipping into their savings. However, some, particularly those who own second properties, will sell due to high interest rates.
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