The property winners and losers – Cameron Kusher

Cameron Kusher reveals some insights from the Core Logic Pain and Gain Report and says in the capital cities, we are seeing a little bit of a climb generally in the percentage of people reselling their properties at a loss. He tells us about where it is occurring and with what type of properties.
Kevin:  There’s a good report inside the latest Your Investment Property magazine that deals with the Pain & Gain Report, which is a report that I always love to get from CoreLogic RP Data. Joining me to talk about that report and what we’re feeling in the industry at present – a bit of pain – Cameron Kusher joins me.
Good day, Cameron. Nice to be talking to you again. Thanks for your time.
Cameron:  No worries, Kevin. Thanks.
Kevin:  Always an interesting report, the Pain & Gain Report. Where do you go to first? Are you finding that there’s more and more people in pain, Cameron?
Cameron:  When we look at the resells, we are seeing it’s a bit mixed. In the capital cities, we are seeing a little bit of a climb generally in the percentage of people reselling their properties at a loss. It’s largely being driven by the unit market.
But when we look at the combined regional markets, we’re generally seeing improvement in those markets. That’s, again, largely being driven by the fact that a lot of the coastal markets are stronger. We’re still seeing a lot of weakness, though, in those markets linked to the mining and resources sector.
Kevin:  You mentioned there about units. Are we seeing a bit of evidence there that there might be an oversupply in some areas, Cameron?
Cameron:  We definitely are. I guess what we’re finding, though, is that it’s more so outside of Sydney. In fact, Sydney is actually seeing fewer units reselling for less than what they were purchased for than houses. But in every other capital city and every other regional market across the country, we’re seeing more units reselling at a loss than houses.
To give you some perspective, in Melbourne, you’re talking about less than 2% of houses reselling at a loss compared to about 11% of units. In Brisbane, you’re talking about less than 5% of houses reselling at a loss compared to almost a quarter of all units reselling at a loss. So, you can see that there’s a pretty big disparity between the two property types.
Kevin:  Yes, absolutely. What are the trends that you’re noticing in terms of people who are buying? We’re looking at single-person households. Are they becoming more prevalent?
Cameron:  They’re certainly becoming more prevalent. That’s reflective of what we’re seeing across the country also. We’ve seen a lot of unit construction over recent years, so we have been seeing more sales flowing towards that unit market. But obviously, the data is suggesting that a lot of those people now looking to resell are selling for less than what they purchased those properties for.
Kevin:  We’re seeing some incredible incentives being offered in some of the markets to try and clear some of this stock. Are you hearing anything about that at all? Is that a trend that would concern us?
Cameron:  I think that’s definitely concerning, and I think it’s reflective of the fact that people – particularly developers – are really struggling to clear the end stock. Of course, in the federal Budget, we also got the announcement that developers can only sell 50% of these new off-the-plan projects offshore.
It’s not a case whereby they used to be able to just go and do a roadshow through Asia and find lots of buyers for these properties. They’ve already initially sold a lot property to offshore buyers. They don’t really have the capacity to do that anymore, and I think that’s going to make it a little bit harder for developers to clear that stock at the end of a project.
Kevin:  Cameron, what did the Pain & Gain Report tell us about the Perth and Darwin markets?
Cameron:  It shows us that those markets are continuing to weaken. If we look at Perth, for example, you’re talking about almost a quarter of all properties – that’s houses and units – selling for less than what they were purchased for. In Darwin, you’re talking about more than a third of all properties in Darwin reselling for less than what they were purchased for.
I guess this is really reflective of what’s happened. The market’s fallen by about 10%. A lot of people don’t have a job in these areas anymore, so they need to leave the market, and unfortunately, they’re taking a bit of a hit when they do so.
Kevin:  Capital city versus regional markets, any indicators there for us, Cameron?
Cameron:  The capital cities are generally doing better. If we look at houses, for example, you’re looking at about 6% of houses reselling under the previous purchase price, compared to 11% in the regional markets. For units, it’s about 11.5% or 12% for resells at a loss in the capital cities, compared to about 17% in regional markets.
Capital cities are still stronger, but as I said, there has been a little bit of creeping up in the percentage of loss in the capital cities and a continued fall in the regional markets.
Kevin:  That’s a snapshot for you from the Pain & Gain Report from CoreLogic RP Data. My guest has been Cameron Kusher.
Cameron, thanks for your time.
Cameron:  Thanks, Kevin.

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