The results are in and it's not pretty for property investors.
Almost a quarter of homes sold during the September quarter in regional Western Australia and Queensland sold at a loss, according to a new report.
The CoreLogic RP Data Pain & Gain Report compares how much a property sold for compared to its last selling price on a gross basis. For those investors buying properties for the negative gearing benefits, not only have they lost money each year, but they have also suffered a capital loss.
That is sure to sting some investors, who may have been led to believe that "property prices always go up", or "you can't lose buying property". An estimated $383 million was lost in total, with an average loss of $62,246 per home.
According to the report, Mackay was the biggest loser, with 37% of homes selling at a loss in the September quarter. Mackay is a central Queensland hub, with ties to the nearby Bowen Basin mining projects.
Regional Western Australia was the worst performer region-wise, with 22.5% of homes selling at a loss, followed closely by regional Queensland. The two regions accounted for 9 out of the 10 worst-performing regions.
Across Australia, 9.3% of all homes sold recorded a gross loss.
One of the beliefs in Australia is that buying property is almost a 'sure thing'. This report proves that not all property investors will make a profit, in fact at least 1 in 5 investing in the regional areas mentioned above has lost their dough.
One thing the results do highlight is that the fallout from the slowdown in the resources sector is now affecting other parts of the economy. One way the big miners including Rio Tinto Limited (ASX: RIO), BHP Billiton Limited (ASX: BHP), Fortescue Metals Group Limited (ASX: FMG) are cutting costs is by slashing staff numbers.
Those property investors who bought into those regional areas during the good times now have to face the music, and it's unlikely to get better any time soon.
