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Profit Search Becomes More Of A Challenge

Properties are moving but the number sold for a gross profit has dipped, a CoreLogic report shows.

By: Sally Lindsay

1 September 2023

CoreLogic’s latest Pain and Gain Report shows gains have dropped, down to a median profit of $290,000 – well down on a peak profit of $440,000 in the last quarter of 2021 – the height of the housing market boom.

The number of properties sold for a gross profit dipped to 93.1 per cent in the second quarter of this year. While that remains a high figure – reflecting that long hold periods means most sellers still make gains – it’s lower than 94.1 per cent in the first quarter of this year, and well down on the 99.3 per cent peak in the fourth quarter of 2021.

Properties that were sold for a gross profit in the second quarter of this year had been owned for a median of 8.4 years. By contrast, for loss-making sales in the three months to June, the median hold period was just 1.8 years.

The Breakdown

CoreLogic chief economist Kelvin Davidson says the share of property sales for a profit, and the fall in the size of those profits, continues across the country, whether the figures are broken down by property type (eg apartments vs houses) or owner type (investors or owner-occupiers).

From only 0.5 per cent of stand-alone house sales being made below the original purchase price in the first quarter of last year, that figure has now risen to 6.2 per cent. It’s the highest since the first quarter of 2016 or, in other words, relatively fewer house sellers are making a gross profit than has been the case for about seven years.

For apartments, 26 per cent of sales in the second quarter of this year were made for a gross loss. In mid-2021, that figure was only about 5 per cent, and the latest result is the highest since 28.1 per cent in the third quarter of 2013.

Davidson says it’s important not to get carried away by that. “First, the proportion of apartment loss-making sales has been much higher in the past, eg 45-50 per cent in the early 2000s and about 2008-10. Second, the raw number of loss-makers is still relatively low, at only 78 deals in the second quarter of this year. (The figure of 28.1 per cent in 2013 equated to almost 140 deals.)

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