Despite the economic shocks caused by the COVID-19 pandemic, it appears that the number of loss-making home sales has been brought under control, according to the latest report from CoreLogic.
The CoreLogic report states that institutional responses to mitigate the risks of the COVID-19 pandemic have helped isolate the increase in deficit sales. In fact, the share of loss-making sales increased only marginally to 12.8% despite the decline in transactions and the general slowdown in the economy.
"Mortgage deferrals reduced the incidence of distressed sales and kept inventory levels low, which may have supported house prices. Low mortgage rates and liquidity Bank support also helped to limit further price cuts, which would otherwise result in higher loss-making rates, ”the report said.
Additionally, the report states that the rise in national property values ??prior to COVID-19 helped many sellers avoid a loss. Nationally, home values ??have fallen only 2.1% since peaking in April.
Six of the eight capital markets reported an increase in the share of loss-making sales during the quarter. The highest proportions of homes sold at market value were found in Darwin and Perth.
"Interestingly, the share of loss-making sales has not seen a quarterly increase in Perth, which is another piece of data indicating the stabilization, or even potential recovery, of this housing market," CoreLogic said.
In contrast, the ACT recorded the largest quarterly increase in loss-making transactions, increasing 1.9 percentage points to 12.8%. It was a surprising find, according to CoreLogic, given that the ACT market has resisted amid the pandemic.
"However, the bottom line is the continued weakness in the unit market. The loss sales rate of ACT units reached its highest level since January 2017," CoreLogic said.
This trend was evident at the national level. In fact, homes had a higher rate of for-profit sales, with 89.6% being sold above market value versus 79.3% in units.
The study also found that investors were more likely to suffer a loss than homeowners. About 18% of transactions conducted by investors resulted in a loss, compared to 11% for owner-occupiers.
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