Real estate not always a ‘safe as houses’ investment | Making Money | The Border Mail

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It’s the old cliché: You can’t go wrong with bricks and mortar, but the latest Pain and Gain report from CoreLogic shows you can. The report covers the September quarter of 2021 – a period of extended lockdowns across Sydney, Melbourne and Canberra. So it’s testimony to the strength of the property market last year that 92.4 per cent of homes re-sold nationally during the quarter made a nominal (before costs) profit – the highest proportion since May 2011. While the median gain on re-sale was $270,000 Australia-wide, houses had a better success rate at turning a profit. Over nine out of ten (95 per cent) houses nationally sold for more than the seller paid, compared to 86 per cent of units. However, it wasn’t a case of ‘safe as houses’ right around the country. Over one in five Darwin houses sold at a loss during the quarter. The city’s apartment market was especially unkind to re-sellers, with almost six out of ten (55.8 per cent) of apartments selling for below their original purchase price. What’s interesting is that CoreLogic found home owners tended to fare better when it came to making a profit than investors. This isn’t necessarily related to a higher rate of turnover among investors. Both home owners and investors held onto the properties they sold for just over eight years. According to CoreLogic it’s more about the type of properties investors sold. Investors are more active in the apartment market, and units have been less profitable than houses over the past decade, with annual value growth of four per cent compared to six per cent for houses . That said, the length of time a property is held can be a key driver of making a profit on re-sale. I mentioned earlier that the median profit nationally was $270,000. However, for those who held their place for 20 years – as some home owners do, the profit on sale rose to a median of $540,500. These results don’t pinpoint the ‘best’ place to buy. Or the right time to buy property. But they do confirm the need to research where you buy and the type of property you select – and think about how long you plan to hold onto the place, if you expect to make a decent gain when the time comes to sell up. Paul Clitheroe is Chairman of InvestSMART, Chair of the Ecstra Foundation and chief commentator for Money Magazine.

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It’s the old cliché: You can’t go wrong with bricks and mortar, but the latest Pain and Gain report from CoreLogic shows you can.

The report covers the September quarter of 2021 – a period of extended lockdowns across Sydney, Melbourne and Canberra.

So it’s testimony to the strength of the property market last year that 92.4 per cent of homes re-sold nationally during the quarter made a nominal (before costs) profit – the highest proportion since May 2011.

While the median gain on re-sale was $270,000 Australia-wide, houses had a better success rate at turning a profit.

Over nine out of ten (95 per cent) houses nationally sold for more than the seller paid, compared to 86 per cent of units.

However, it wasn’t a case of ‘safe as houses’ right around the country.

Over one in five Darwin houses sold at a loss during the quarter.

The city’s apartment market was especially unkind to re-sellers, with almost six out of ten (55.8 per cent) of apartments selling for below their original purchase price.

What’s interesting is that CoreLogic found home owners tended to fare better when it came to making a profit than investors.

This isn’t necessarily related to a higher rate of turnover among investors.

Both home owners and investors held onto the properties they sold for just over eight years.

According to CoreLogic it’s more about the type of properties investors sold.

Investors are more active in the apartment market, and units have been less profitable than houses over the past decade, with annual value growth of four per cent compared to six per cent for houses.

That said, the length of time a property is held can be a key driver of making a profit on re-sale.

I mentioned earlier that the median profit nationally was $270,000.

However, for those who held their place for 20 years – as some home owners do, the profit on sale rose to a median of $540,500.

These results don’t pinpoint the ‘best’ place to buy.

Or the right time to buy property.

But they do confirm the need to research where you buy and the type of property you select – and think about how long you plan to hold onto the place, if you expect to make a decent gain when the time comes to sell up.

Paul Clitheroe is Chairman of InvestSMART, Chair of the Ecstra Foundation and chief commentator for Money Magazine.