Why time can be your best tool in property
There are compelling reasons to retain ownership of a property for an extended period of time.
No matter whether you’re a homeowner or investor, there's a straightforward approach that can help you succeed. The process is clear, and recent CoreLogic data highlights its effectiveness.
In the September 2023 quarter, a remarkable 93.5% of property resales yielded a nominal gain, marking an increase from the previous quarter's 92.9%. The overall profit from national resales surged to an impressive $27.4 billion, up from $26.3 billion, while total losses dwindled to $313 million, down from $325 million.
However, a closer look at short-term resales, defined as those held for three years or less, revealed a slight uptick in the portion of loss-making sales, rising from 6.5% in the June quarter to 6.6% in the three months to September.
CoreLogic’s Head of Research, Eliza Owen, said an increase in short term resales was happening amid rapidly rising interest costs, and may be a reflection of higher mortgage stress.
"While the portion of short term reselling dipped marginally quarter-on-quarter, resales with a hold period of three years or less hit a decade high in the year to September,” she said.
The short-term resale losses were spread across Australia, with Melbourne – Inner (4.1%), Melbourne – West (3.7%), and NSW’s Central Coast (3.6%) experiencing the highest portions. The median loss from these short-term resales was -$30,000 in the September quarter and most were houses (64.8%). On the flip side, CoreLogic reports the median gross profit was $298,000.
Beyond the financial gains, there are compelling reasons to retain ownership of a well located, quality or full-of-potential property for an extended period. But don't fret if your property isn't deemed well-located or needs some work. On the contrary, it might hold future development potential. Perhaps it's a larger block that could be subdivided, and nearby developments in the street could serve as a precedent for your proposed project.
Unlike other investment classes prone to drastic price fluctuations, the property market tends to offer a more stable environment.
Property ownership can be a source of ongoing income through rental returns. Holding onto your property and leasing it out can provide a steady stream of revenue, potentially enhancing the overall financial viability of your investment.
Whether you’re an owner-occupier or investor, taking proactive measures to improve your property becomes an additional investment. Making value-added changes not only improves the quality of the living space but can also increases the property's market value, ensuring a more lucrative return in the long term. Certainly, also be cautious of “overcapitalising”.
Overcapitalisation occurs when property improvements exceed its resale value, making it hard to get your money back when you decide to sell the property. In such instances, even the passage of time may not put you in the black.
That warning aside, if you have been thinking about improving your property, adding a swimming pool or upgrading your bathroom or kitchen, check out our unsecured Home Improvement Loan.
With loans starting from as little as $1,000 and competitive interest rates, our Home Improvement Loan can help turn your renovation dream into reality. Apply online at www.communityfirst.com.au/ or call us today on 1300 13 22 77.
¹ Rate for new loans is current as at 23/11/23 and subject to change without notice.
¹ Rate for new loans is current as at 23/11/23 and subject to change without notice.
*The comparison rate is based on an unsecured loan amount of $30,000 over a loan term of 5 years. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
https://www.corelogic.com.au/news-research/news/2023/short-term-loss-making-resales-continue-to-rise
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