Home borrowers are being warned to brace for bad news with the proportion of houses and units selling for a loss at the highest level in five years, new figures show.
Across Australia, one in 10 homes sold during the June quarter fetched a lower amount than the purchase price, data from real estate data group Core Logic showed.
The proportion of loss-making sales, at 10.2 per cent, was at the highest level since the three months to October 2013, with apartments more likely than houses to burn the seller.
In some Australian capital cities, more than half of all units sold were being offloaded at a loss, with six of the seven mainland capitals seeing a double-digit proportion of apartment owners losing money at sale time.
Home borrowers are being warned to brace for bad news with the proportion of houses (pictured in Perth) and units selling for a loss at the highest level in five years
Across Australia (Melbourne pictured), one in 10 homes sold during the June quarter fetched a lower amount than the purchase price, data from real estate data group Core Logic showed
In Perth, 23.4 per cent of homes sold at a loss, followed by 20.1 per cent in regional Queensland.
Inner-city apartments fared particularly badly, with 53.4 per cent of central business district Perth units selling at a loss during the three months to June 30.
Brisbane’s inner-city was also a bad place to invest with 32.4 per cent of units fetching less than the seller had previously paid, compared with 22.3 per cent in Melbourne’s inner-city.
In Darwin, a whopping 71.1 per cent of units sold at a loss during the June quarter, a jump from 51.9 per cent during the same period a year earlier.
Core Logic head of research Tim Lawless said houses were a better investment than apartments, with units nine times more likely to sell at a loss in Melbourne than a detached home with a backyard.
‘Houses consistently record a higher proportion of resales at a profit than units,’ he said.
Apartments outside Sydney are a bad investment with a double-digit percentage of capital city units selling at a loss during the June quarter (Source: Core Logic)
Brisbane’s inner-city was a bad place to invest with 32.4 per cent of units selling for less than the seller had previously paid
‘This may be attributed to the underlying land value of detached houses, which is a significant part of the overall value.
‘But it’s also because unit markets can be more prone to oversupply than house markets.’
Sydney, however, was the least risky capital city market to buy a unit, with only 3.1 per cent of units in the city and the inner-south selling at a loss, in Australia’s most densely populated locality where 71 per cent of dwellings sold are apartments.
Across Australia, 9.4 per cent of capital city properties sold at a loss compared with 11.6 per cent in regional markets.
Investors were more likely to get assaulted financially, too, with 10.1 per cent of them making a loss, compared with 9.8 per cent of owner occupiers.
In Darwin, a whopping 71.1 per cent of units sold at a loss during the June quarter, a jump from 51.9 per cent during the same period a year earlier
The dire news about the Australian property market was released on Monday, the night after Sixty Minutes aired SQM Research founder Louis Christopher’s prediction that house prices in Australia’s biggest markets were in for a massive decline.
‘On our numbers, Sydney was effectively over 40 per cent overvalued and Melbourne was overvalued by the same amount,’ he told the Nine Network.
Financial analyst Martin North said Australia was facing a ‘debt bomb’ similar to the United States in 2006 before its property market crashed, sparking the global financial crisis as sub-prime borrowers struggled to keep up with repayments.
‘We are uniquely exposed, because as a society and as a government and as a regulatory system – we’re all banking on the home price engine to just (keep) giving and giving – but it’s not going to,’ Mr North said.
‘We’ve got a debt bomb, we’ve got a debt crisis, and at some point it’s going to explode in our face.’
In November 2008, former University of Western Sydney associate professor of economics Steve Keen bet that Australian house prices would fall 40 per cent from their peak, as fears about the global financial crisis engulfed share markets.
Prices in Sydney and Melbourne both peaked in 2017, with median prices of $1.080 million and $834,318.
Fall from falling, after the GFC Sydney home prices surged by 70 per cent in just five years before peaking last year.
Dr Keen agreed to walk 224km from Canberra to top of Mount Kosciuszko, Australia’s highest mountain for losing a bet on house price falls a decade ago.