This edition of the Pain and Gain report analyses approximately 72,500 sales that took place over the first quarter of 2020. It highlights how many of these sales made a nominal loss or gain relative to the previous sale.

Nationally, the portion of profit-making sales in the March quarter fell to 87.7% from 88.7% in the December quarter. The total value of gross profit derived from resold dwellings was $19.8 billion. This is down 12.0% from the $22.5 billion gained over the December 2019 quarter, though substantially higher than the $14.3 billion in profit making sales over March 2019 when housing the housing market broadly remained in a downturn. Losses totalled $908.6 million in the March quarter, up from $766 million in the December 2019 quarter.
 
Eliza Owen, head of research on the latest pain and gain results “There has been an uplift in the portion of loss-making sales over the March quarter. But despite the potential for some fallout from COVID-19 at the end of the quarter, only a small portion of the loss making sales are a reflection of the onset of the pandemic.”

In the first section of the report, the underlying transaction data shows that the portion of loss-making sales stayed relatively steady with the onset of strict social distancing in late March. This is because the volume of sales has declined, with vendors likely to hold, rather than sell, in a highly uncertain economic period. 

CoreLogic estimates of modelled sales volumes suggests that there was a 32.4% decline in transaction activity in April 2020, which then recovered over May and June. 

“The Pain and Gain results over the second half of 2020 could see an increase in the portion of loss-making sales, but the volume of sales activity may be more subdued, as vendors were less likely to test the market at the height of the pandemic. However, assistance for mortgage holders whose jobs and incomes have been impacted by the pandemic was likely also instrumental in keeping loss making sales low.” said Owen 

Key findings

  • Profit-making sales nationally fell to 87.7% over the March quarter from 88.7% in the December Quarter
  • Total value of gross resale profits down 12% over the March quarter, although higher than over the March 2019 quarter
  • There was a 32.4% decline in transaction activity in April 2020, which then recovered over May and June. This suggests the second half of 2020 could see an increase in loss-making sales.
  • Nationally, units had a higher portion of loss making sales (19.8%) compared with houses (9.7%)
  • Across the capital cities, most regions saw an increase in the portion of loss making sales over the March quarter. Sydney and Hobart were the only regions that continued to see a decline in the portion of loss making sales
  • The impact from COVID-19 was not a substantial uplift in loss-making home sales, but rather a reduction in sales overall.