Selling Your Home in Australia CoreLogic’s Pain and Gain Report Reveals Market Trends

Introduction

When it comes to selling your home in Australia, it’s important to stay informed about the current market trends and factors that may impact your sale. CoreLogic’s recent Pain and Gain report provides valuable insights into the state of the property market, highlighting both challenges and opportunities for sellers. In this article, we will explore the key findings of the report, discuss the increasing trend of distressed selling, examine the overall profitability of the property market, and address concerns about underquoting during the spring selling season.

Distressed Selling on the Rise

According to CoreLogic’s report, there has been a notable increase in distressed selling in the Australian property market. The data reveals that in the June quarter, 9.7% of properties sold within two years were sold for less than their purchase price, resulting in a median loss of $30,000. This is a significant rise compared to the previous quarter’s figure of 9.4% and the figure from a year ago, which stood at just 2.7%.

Eliza Owen, the head of research at CoreLogic and the author of the report, suggests that this increase in distressed selling may be attributed to high interest rates. Despite the record low rates experienced throughout 2020 and 2021, some homeowners may be facing financial difficulties and are forced to sell their properties at a loss. Owen points out that the two-year mark is significant as it marks the period after the peak of pandemic-related lockdowns and the transition from low fixed rates to high variable rates.

The recent easing of concerns about a potential rise in distressed selling is also worth noting. A report from SQM Research indicates a decrease in distressed selling over the preceding month, accompanied by a 2.1% increase in national asking prices. While these findings provide some reassurance, it is essential for homeowners to stay vigilant and adapt their selling strategies accordingly.

Overall Profitability in the Property Market

Despite the increase in distressed selling, the property market in Australia remains highly profitable. CoreLogic’s report highlights that 92.8% of quarterly resales made a nominal profit. This indicates that the majority of property sellers are still able to achieve a positive return on their investment.

Eliza Owen predicts that this trend of profitability will continue into the final quarter of 2023. She suggests that the rate of profit-making sales is closely linked to capital growth trends. As home values continue to rise, the level of profitability from resales is expected to increase as well.

A separate report from Domain, released concurrently with CoreLogic’s findings, further supports the notion of a highly profitable property market in Australia. The report reveals that the median profit on house resales has increased by 126% from $108,500 in 2013 to $245,000 in 2023. These figures indicate significant growth and potential opportunities for sellers in the Australian property market.

Beware of Underquoting During the Spring Selling Season

As the spring selling season approaches, many prospective homeowners are looking forward to finding their dream homes. However, it is crucial to remain cautious and aware of potential pitfalls, particularly underquoting.

Michelle May, the principal of Michelle May buyers agents, warns buyers to be wary of asking prices that seem too good to be true. Underquoting occurs when selling agents deliberately list properties for significantly lower prices than their actual worth. This strategy aims to attract more potential buyers, but it can lead to disappointment and frustration when the final sale price exceeds expectations.

May suggests that underquoting is often a tactic employed by selling agents to make their own performance look better by achieving a sale price that far exceeds the initial asking price. She emphasizes that underquoting is illegal under Australian Consumer Law and the Fair Trading Act. While regulatory bodies have increased their oversight and taken action against underquoting, more needs to be done to eradicate this practice completely.

To protect themselves from the risk of underquoting, buyers should conduct thorough research, seek professional advice, and engage the services of a reputable buyers agent who can provide guidance and support throughout the purchasing process.

Conclusion

When it comes to selling your home in Australia, it is essential to stay informed about the current market trends and factors that may impact your sale. CoreLogic’s Pain and Gain report provides valuable insights into the state of the property market, highlighting the rise in distressed selling and the overall profitability of the market. While the increase in distressed selling may pose challenges for some sellers, the majority of quarterly resales still result in a nominal profit. However, it is crucial for homeowners to remain cautious during the spring selling season and be aware of the potential issue of underquoting. By staying informed and seeking professional advice, sellers can navigate the market successfully and achieve a successful sale.