Property Sellers Reaping Strong Profits

Posted by Jack Guthrie

It’s often true that the squeakiest wheel gets the most oil, and those who make the most noise will often receive the most attention. The same can be said for investors. An unfortunate truth is that when one investor experiences a negative result, they more than likely will voice their negative opinion, leading others to expect that they are in the same boat. This effect is ringing true throughout our market at the moment. Media headlines about shonky building quality, subjective valuations from lenders and even generalised market commentary are all petrifying investors into the idea that they are holding onto ticking time bombs.

This blanket view, however, couldn’t be more wrong after new analysis from the CoreLogic Pain and Gain report. Data released in September shows that amidst a market that has been branded unfavourable for investors, there has still been strong results for property sellers across the country.

The national report indicated that in the June 2019 quarter, 87.1 per cent of properties across Australia resold for a profit. 89.7 per cent of houses resold at a profit compared to 79.6 per cent of units across both the combined capital city and regional markets.

The most interesting point from the data, is the average timeframe taken for property owners to turn a profit. According to CoreLogic, houses that sold for a profit were typically held for 10.0 years and units 8.8 years. House owners that sold at a loss typically held their property for 5.8 years. Units that sold at a loss were generally held for a similar period of 5.7 years.

What this shows is that fortune favours those who wait in the property game. Exercising patience and holding for the long term should be your main goal along your investment journey. Adopting a holding period of at least 10 – 15 years allows you to leverage off multiple growth cycles in the market and provides the best opportunity for capital growth. This isn’t an opinion, it’s a fact and the data backs it up.

The reality is that approximately 1 in 10 property owners made a loss over the last quarter, and those who did, sold after a relatively short holding period. So, before you make any rash decisions based on what you have heard from distressed sellers who made a loss, realise that they are probably the squeaky wheel.

If you want the best opportunity to invest well, allow yourself to get educated and get into Blue Wealth today.

Posted by Jack Guthrie, on 8th Oct 2019