The number of home owners in Australia who are selling their homes quickly but not making a profit from the transaction is growing.
The percentage of homeowners who made a loss after selling their home after two years of purchasing it increased to 9.7% in the June quarter, according to new data from CoreLogic. This number compares to only 2.7% during the same time period in 2022.
The average amount of money that was lost due to the resale was $30,000.
“We are two years on from the peak of pandemic-related lockdowns, low interest rates, and have just passed the peak of transitioning from low fixed rates to high variable rates,” said Eliza Owen of CoreLogic. “We have just passed the peak of transitioning from low fixed rates to high variable rates.”
Over the course of the past year, the percentage of properties sold within just two years grew by one percentage point to 8.5%; nevertheless, the percentage of these short-term resales in which the seller sustained a loss has increased more considerably.
In comparison to the other capital cities, home resales in Darwin were the most likely to result in a loss, with 34.4% of transactions resulting in a price that was lower than the original purchase price.
After that, Perth came in second with a loss rate of 12.3%, while Adelaide had the highest profit margin of any city with only 1.8% of sales going into the red.
According to a survey that was published by Domain on Thursday, people who decide not to sell their homes are remaining there for longer periods of time.
The length of service in Darwin, Sydney, Perth, and Canberra was all longer than the national median, while the length of service in Hobart was the smallest at seven years.
“The lengthening tenure reflects the reality of significantly stretched and highly leveraged household budgets,” said Nicola Powell of Domain. “The longer term reflects the reality of significantly stretched and highly leveraged household budgets.”
“When you consider the transactional costs associated with buying and selling a home, such as conveyancing and stamp duty, it’s no surprise that people are becoming more cautious, even if their current property does not fully meet their lifestyle needs,” says an expert. “When you consider the transactional costs associated with buying and selling a home, it’s no surprise that people are becoming more cautious.”
According to the findings of the Domain analysis, in 2023, 96.3% of homes in Australia will bring in a profit when they are sold.
“The proportion of profitable resales remains consistently high, which is a trend that is expected to continue as Australia’s housing market recovers,” Powell added.