Units continue to show a higher proportion of loss-making resales compared to houses, with levels across capital cities hovering close to its highest level in four years, a report shows.
In the three months to March 31, 11.5 per cent of units across capital cities combined resold at a loss, according to the CoreLogic Pain and Gain quarterly report.
That compared to 6.1 per cent of houses in the same period and was up from the same period in 2013 – and only just below an 11.8 per cent peak recorded in January 2013.
The current figures show Sydney was the only capital city in which units had a lower proportion of resales at a loss (1.8 per cent) than houses (2.6 per cent) over the quarter.
Report author Cameron Kusher said that since 1997 there has never been a quarter in which a higher number of houses resold at a loss compared to units.
He said the higher proportion of loss-making resales for units is due to the fact that houses tend to be more valuable and sought after because of land value, whereas a unit’s value is often derived from its location.
“The unit sector is more prone to over supply which is another factor which is likely weighing down the resales performance,” Mr Kusher said in a statement on Monday.
“This may go some way in explaining why houses tend to see fewer resales at a loss compared to units.”
Overall, 13.3 per cent of units resold at a loss across the country, compared to 8.1 per cent of houses.
Units in the Australian Capital Territory were 14.5 times more likely to be resold at a loss than houses, while Melbourne units were 6.5 times more likely.
The number of regional units reselling in the red also rose over the quarter in Victoria, South Australia, Western Australia and the Northern Territory, but fell elsewhere.
“Where the proportion of unit resales at a loss is increasing it has generally been rising at a more rapid pace than the increase in houses reselling at a loss,” the report said.
Overall, the total gross losses over the quarter was recorded to be $493.8 million, with a median gross loss of $35,000 per resale.