The portion of property sellers who took a loss increased slightly over the March 2020 quarter, according to CoreLogic's latest Pain and Gain report. Is 2020 not the right year for property owners to sell?
The report showed that losses in the March 2020 quarter hit $908.6m, up from $766m in the previous quarter. Of all states, only Sydney and Hobart reported declines in the share of loss-making sales.
On the other hand, the share of profit-making sales in first three months of the year fell to 87.7%, down by 100 basis points from the previous quarter. The gross profit of resold homes in the quarter was down by 12% from $22.5bn to $19.8bn.
On an annual basis, the value of profitable sales increased significantly from $14.3bn during the same period last year. This was in the time when the market was in a downturn.
"Despite the potential for some fallout from COVID-19 at the end of the quarter, only a small portion of the loss-making sales are a reflection of the onset of the pandemic," said Eliza Owen, head of residential research at CoreLogic.
Owen said the share of loss-making sales stayed relatively steady with the onset of strict social distancing in late March.
While Owen expects that the housing market to report an increase in the portion of loss-making sales over the second half of 2020, she believes the volume of sales activity might be more subdued as vendors are unlikely to test the market.
"Assistance for mortgage holders whose jobs and incomes have been impacted by the pandemic was likely also instrumental in keeping loss-making sales low," Owen said.
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