WA property investors suffer as mining slump lingers, with one-third losing money on resale


Posted

March 20, 2018 16:32:34

Investors in Perth property are faring the worst in the nation, making more losses on resale than buyers in any other capital city.

A report from property research firm CoreLogic shows one-third of investors in Perth property lost money on resale in the December quarter.

The figure of 33.6 per cent was equal with Darwin as the highest proportion of loss-making resales nationally.

In regional WA, the situation was even worse — 47.5 per cent of resales by investors made a loss in the quarter.

By comparison, almost nine out of 10 investors made a profit at a national level, and only 11.3 per cent recorded a loss.

CoreLogic head of research Tim Lawless said Perth had experienced a double whammy of declining population growth and a surge in new housing supply.

“For those people that incurred a loss, it was typically around five years that they’ve held their property, which does roughly coincide with about when the market peaked,” Mr Lawless said.

“Those buyers that bought in after a relatively strong capital gain over the previous years have then faced a downturn in the marketplace.

“And those that have had to sell in the meantime are generally looking at prices that are lower than when they bought into the market.”

Investors in mining towns, first-home buyer suburbs suffer

For house resales, six of the top 10 loss-making suburbs were in WA — nearly all of them in the regions.

Mining towns made up two-thirds of the list, including Karratha’s Pegs Creek and Bulgarra, South Hedland and Newman.

Withers, in Bunbury, was ranked seventh, while the southern Perth suburb of Wilson, in Canning, was the only metropolitan suburb to make the list.

In contrast, unit resales showed three of the top 10 loss-making suburbs were in Perth — the inner city (third), Mandurah (seventh) and Subiaco (eighth) — where apartment construction has boomed in recent years.

Queensland accounted for all bar one of the other suburbs in the top 10 lists.

Perth had three other suburbs — Bertram, Westminster and Innaloo — in the top 20 loss-makers for houses.

Mr Lawless said that reflected a surge in the supply of new, detached housing, particularly in first-home buyer suburbs and the outer fringes.

“If you look at the areas where first-home buyers have been relatively active, it’s also those areas that are typically greenfield housing estates,” he said.

“There’s been a lot of new detached housing brought into the marketplace at a time when we’ve seen a reversal of interstate migration trends.

“The level of housing demand isn’t as strong as it used to be in many of these outer-flung markets.”

‘Harder decision’ for owner-occupiers

Owner-occupiers also made greater losses in regional WA than anywhere else, with those in Perth second only to Darwin in loss-making sales.

“Investors generally are more prepared to take on a loss on their property ownership, probably because of some of the tax implications,” Mr Lawless said.

“For owner-occupiers, you generally find about 52 per cent of household wealth is held in housing.

“Transacting at a loss is a much harder decision [for owner-occupiers].”

But the trajectory of Perth property prices may be turning, Mr Lawless added.

“The second half of 2018 could even be characterised by some subtle improvements in broader dwelling values across Perth, as we start what’s probably going to be a gradual recovery,” he said.

The CoreLogic report included data for suburbs with at least 10 resales during the December quarter.

Topics:

housing-industry,

housing,

perth-6000,

karratha-6714,

wilson-6107,

withers-6230,

bunbury-6230,

mandurah-6210,

subiaco-6008,

bertram-6167,

westminster-6061,

innaloo-6018,

south-hedland-6722,

newman-6753,

wa



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