Long-Term Homeowners Still Face Losses Despite Extended Holding Periods
New data from Cotality’s Pain and Gain Report challenges the conventional wisdom that holding property for extended periods guarantees a profit. While 95.9% of Australian dwellings sold in the December quarter yielded nominal profits, a small subset of vendors incurred losses despite holding their properties for an average of 8.2 years, nearly matching the 9.2-year hold period of profitable sellers. Houses outperformed units, with 98.1% of house resales recording profits compared to 91.2% of units. Experts highlight that market dynamics, such as oversupply in high-density areas like Parramatta, can depress values regardless of holding duration. Buyers’ agent Michelle May notes that generic units and off-the-plan properties are particularly susceptible to losses due to immediate depreciation and high competition. To achieve real capital growth after accounting for transaction costs like stamp duty and commissions, sellers are advised to hold properties for at least five to seven years. The report emphasizes that while time generally increases profit odds, it is not a fail-safe strategy against localized market pressures and property-specific risks.
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Long-Term Homeowners Still Face Losses Despite Extended Holding Periods
New data from Cotality’s Pain and Gain Report challenges the conventional wisdom that holding property for extended periods guarantees a profit. While 95.9% of Australian dwellings sold in the December quarter yielded nominal profits, a small subset of vendors incurred losses despite holding their properties for an average of 8.2 years, nearly matching the 9.2-year hold period of profitable sellers. Houses outperformed units, with 98.1% of house resales recording profits compared to 91.2% of units. Experts highlight that market dynamics, such as oversupply in high-density areas like Parramatta, can depress values regardless of holding duration. Buyers’ agent Michelle May notes that generic units and off-the-plan properties are particularly susceptible to losses due to immediate depreciation and high competition. To achieve real capital growth after accounting for transaction costs like stamp duty and commissions, sellers are advised to hold properties for at least five to seven years. The report emphasizes that while time generally increases profit odds, it is not a fail-safe strategy against localized market pressures and property-specific risks.
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