Real Estate

Loss-making sales at 16-year low as capital growth slows

Written by The ReReport
As seen in the Source link, written by on 2018-12-18 05:01:44

THE proportion of loss-making property sales in Geelong hit a 16-year low this year as the local market continued to defy a national slump.

Loss-making sales dropped to .8 per cent of all property resales in the September quarter, the latest CoreLogic quarterly Pain & Gain report will show.


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But the proportion of properties selling at a loss is expected to rise next year as homeowners are hit with an anticipated slowdown in capital growth.

The report measures the price of residential properties sold in the three months to September against their previous sale price.

It was the best result since 2002, when .5 per cent of homes sold at a loss.

The report shows the vast majority of Geelong home sellers have enjoyed good times in the past 16 years with loss-making resales capped well below 10 per cent.

CoreLogic senior research analyst Cameron Kusher said the low figure highlighted the strength of the market.

“It certainly has slowed a little bit since then but it highlights the strong run-up in dwelling values that Geelong has seen in the past five years,” he said.

“Most people that are selling now are well ahead. Nationally, only Hobart saw a lower share of resales at a loss than Geelong.”

But Geelong’s strong capital growth in recent years put the local market at risk of losing its affordability advantage to suburbs in Melbourne’s outskirts, a factor Mr Kusher said would apply downward pressure to capital growth rates, Mr Kusher said.

“You might see it a little bit lower next quarter, given that the housing market is slowing in Geelong now,” he said.

The median house price in Geelong rose 13 per cent in the year to $520,000, CoreLogic data shows.

Prices are now $160,000 dearer than Ballarat, where the median price is $360,000, and $180,000 more than Bendigo ($337,000).

“It’s not going to slowdown to the magnitude that Melbourne has, but certainly in the next year you are going to see a slowdown in growth in Geelong,” Mr Kusher said.

McGrath, Geelong agent David Cortous said the high demand and emotion fuelling high price growth had dissipated.

Mr Cortous said easing prices over spring could be the full extent of the market correction locally, predicting a plateau in growth to bring prices back for buyers.

“I think we saw the market change a little over spring as more property came on to the market and the banks’ lending criteria tightened up,” he said.

“You’ve got to be priced to the market, whereas over winter the market was moving that quickly that most people were getting beyond expectations on price.

“The market swung a little bit toward the buyer — it was pretty hard on buyers during winter and it has given them a reprieve.”