According to CoreLogic RP Data's latest Pain and Gain report, recent housing sales reveal that many property investors sold at a loss. Even though majority ended up making a profit, the returns were not that great, even for one-third of those who doubled their money.
Average annual returns showed a miserable four per cent—just a little above inflation—as it took investors an average time of 17.2 years in capital cities and 18.1 years in regional cities to double their money. This is a far cry from the shares market that averages around 9 to 10 per cent per year over long periods of time.
Moreover, nine per cent of property investors even sold their houses or apartments at a loss, despite holding them for around 5.4 years. Just this March quarter, roughly 19.2 per cent of apartments were resold for less than their original purchase price. That means that one out of five apartments cost their owners money rather than deliver capital gains. Losses increased for regional areas of Western Australia, South Australia, Queensland, and the Northern Territory in particular due to the end of the resources boom.
"Property ownership, whether for investment or owner-occupier purposes, should be seen as a long-term investment," said CoreLogic research analyst Cameron Kusher.
Statistics show that property investors should buy houses in one of Australia's East Coast capital cities—namely Sydney, Melbourne, and Canberra—if they want to avoid a loss.
The housing markets suffered a sharp correction in recent months due to the Big Four's limit on investor lending, as well as investors with foreign income.
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