One in five Canberra apartments sold for a loss in the March quarter: report

One in five Canberra apartments sold at a loss in the March quarter, suggesting the city’s soft unit market is still in recovery mode.

CoreLogic’s latest Pain and Gain report for the quarter, which was published on Wednesday, showed that 9.2 per cent of Australian homes recorded a gross loss when compared to their previous purchase price.

Canberra’s total loss-making figure of 9.8 per cent was in line with the national average. Houses fared better, with 2.2 per cent of free-standing homes selling at a loss in the quarter.

In all capital city markets, except for Sydney, more than 10 per cent of apartments sold at a loss.

Domain Group chief economist Andrew Wilson said the result was unsurprising, given the record level of development across all capital cities.

“The market in Canberra has been flat for units over the past few years, notwithstanding the building boom and the oversupply scenario, so there’s no real surprises and the market will take some time to rebalance,” Dr Wilson said.

“It’s the nature of the beast that with a significant level of apartment development that supply does move ahead of demand and that can mean some weakening in prices.

“The Canberra market was noticeably weak from 2011 through to last year and those selling in the environment would have seen their prices below what they paid for.”

While loss-making resales of units remain at around their highest levels since 2000, houses are at their lowest level in four years.

Allhomes data analyst Nicola Powell said this result illustrated strength in the current housing market.

“Demand for family homes has helped to activate the housing market and in turn drive up price, it is not surprising that the proportion of homes making a loss has declined,” Ms Powell said.

“The local market over 2015-16 has been in recovery mode from the sideways growth recorded in the few years prior. This has helped to translate more profit making resales.”

Canberra investors were more likely to sell at a loss than owner-occupiers. Just 5.9 per cent of owner-occupiers sold at a loss across both the house and unit markets, compared to 17.3 per cent of investors.

Dr Wilson said this was a result of the investment market favouring apartment investments over houses.

“You likely see investors in those new apartment developments and that has been quite active in Canberra for certainly the last three years,” Dr Wilson said.

Dr Wilson said the unit market was showing early signs of recovery with vacancy rates starting to fall.

“There’s no doubt that the Canberra market currently is strong and that’s generally from houses,” Dr Wilson said.

“But there are signs, particularly from an investor’s perspective, that the market is starting to rebalance. It’s a journey given the high levels of construction and still a significant number of new apartments coming onto the marketplace.”