The Australian locations where homeowners are selling at a loss
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The Australian locations where homeowners are selling at a loss

The portion of properties sold at a loss within three years of ownership has almost doubled in one year

By Bronwyn Allen
Tue, Jan 9, 2024 9:39amGrey Clock 2 min

Loss-making resales of homes and investment properties held for less than three years are on the rise, indicating more stress in the marketplace amid high interest rates and the cost-of-living crisis. CoreLogic data shows that of the 86,000 resales during the third quarter of 2023, 6.6 percent were sold at a loss after less than three years of ownership. This is up from 3.6 percent in the September quarter of 2022 and represents a 10-year high, according to CoreLogic’s head of research, Eliza Owen.

Properties held for three years or less represented one in five of all loss-making resales, according to the report. These types of sales were seen in many markets across the country. However, the areas recording the highest portion of these sales were Melbourne–Inner at 4.1 percent, Melbourne–West at 3.7 percent and Sydney’s Central Coast at 3.6 percent. The median loss for these resales was $30,000.

Most of the loss-making resales among properties held for less than three years were houses, at 64.8 percent. Ms Owen said this was quite a different trend to all loss-making resales across all tenure periods. On that broader basis, more of the overall loss-making resales were apartments at 70.9 percent.

It is a commonly held view among property experts that real estate must be held over the long term to achieve strong capital growth. This is partly because property prices typically move in cycles that can take several years to complete. Property is also an asset class that involves high entry and exit costs such as stamp duty, legal fees, marketing costs and agents’ commissions. This makes selling after only short periods of ownership undesirable, indicating that those who are choosing to do this are likely to be experiencing financial stress.

During the second half of 2023, thousands of mortgages rolled over from fixed periods of two or three years at interest rates below 2 percent or 3 percent to variable rates of above 5 percent or 6 percent. Some of these sales may reflect the ‘mortgage cliff’ effect of this change. Looking ahead, Ms Owen pointed out that the Reserve Bank of Australia is forecasting unemployment to rise to 4.2% by the end of 2024 and this will test serviceability, and may lead to an increase in motivated selling for mortgagors with high debt levels and low savings buffers.

Ms Owen also emphasises that short-term loss-making resales make up only a small portion of the Australian housing market and this was not expected to change. “This is ultimately a small share of mortgagors, so the portion of shortterm resales is not expected to grow substantially from where it is now. Ongoing increases in home values nationally should contain the rate of loss-making shortterm resales, though capital growth conditions were looking weaker across Sydney and Melbourne to the end of [2023], she said.



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11 ACRES ROAD, KELLYVILLE, NSW

This stylish family home combines a classic palette and finishes with a flexible floorplan

35 North Street Windsor

Just 55 minutes from Sydney, make this your creative getaway located in the majestic Hawkesbury region.

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It’s a slam dunk as a covetable $2m KDR site complete with basketball court hits the market in the Hills District

The ball is in the buyer’s court with this knockdown/rebuild opportunity

By KANEBRIDGE NEWS
Tue, Apr 18, 2023 2 min

Glenhaven in Sydney’s Hills District is one of those areas that locals tend to keep to themselves. Leafy with large blocks on offer, the suburb takes its name from its valley location, with the northern end originally known as the Glen and the southern end called the Haven. 

En route from Parramatta to the Hunter, Glenhaven has become an ideal place for growing families in search of a little more space, or even room to house several generations under one roof.

The challenge is finding properties that tick all the right boxes.

As demand for trades and supply chain issues continue to ease, now could be the right time for a knockdown/rebuild project for would-be buyers looking to create their dream home.

Fairmont Homes specialises in knockdown/rebuild projects in Sydney. General manager at Fairmont Homes, Daniel Logue, said there are key features to look for when choosing a knockdown/rebuild site.

“The key items we look for are the site falling to the street, not to the rear, to help with stormwater drainage as well as access to the site,” he said. “Neighbouring property front setbacks are also important. In some older areas, the older houses are set closer to the street, meaning your new home will have to be set to suit.

“Value for money and the return on the end sale price of the home is another issue.”

If possible, he said designing a home that meets the criteria of the Complying Development legislation will speed up approvals considerably.

While suitable knockdown/rebuild sites can be hard to find in Glenhaven, there are still hidden opportunities if you know where to look.

One block at 158 Gilbert Road, Glenhaven is ideally suited for rejuvenation. With almost 850sqm to play with, it slopes down to the street and sits between neighbouring properties that have already been stylishly updated.

 

 

An existing basketball court at the rear could provide the perfect teen backdrop to a family home, or it could make way for a larger house with landscaped gardens and pool. Alternatively, it could be the perfect position for a cabana or granny flat to serve as in-law accommodation or a source of secondary income.

With recent sales of completed homes in nearby streets reaching well above $5 million, it’s a great opportunity to make a slam dunk of a buy into one of Sydney’s best kept secrets.

Address: 158 Gilbert Road, Glenhaven
Price guide: $1.8 million
Inspection: By appointment only

 

MOST POPULAR
11 ACRES ROAD, KELLYVILLE, NSW

This stylish family home combines a classic palette and finishes with a flexible floorplan

35 North Street Windsor

Just 55 minutes from Sydney, make this your creative getaway located in the majestic Hawkesbury region.

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