33% of all homes sold in regional WA sold at a loss last quarter

Proof that property prices don't go up in a straight line and that they can fall heavily too

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

For those property investors who think house prices can only go up – you might want to take a look at Perth and regional Western Australian property sales results.

According to CoreLogic RP Data's latest Pain & Gain report, 33.8% of homes in regional WA sold at a loss in the June 2016 quarter. Outback WA is one of the worst-performing housing sectors in Australia, with losses of up to 44% of sales.

20.1% of houses in Perth itself sold at a loss over the same period – that's one in every five.

In central Perth, the figure is even worse with more than half the properties (53%) sold at a loss, losing on average $60,000 per property – with the area dominated by apartments.

Darwin is experiencing similar conditions with 24.2% of properties were sold at a loss – the highest level in 14 years.

Region Loss
Regional WA 33.8%
Regional SA 21.7%
Regional NT 21.2%
Regional Qld 19.8%
Regional Tas 19.6%
Regional Vic 9.3%
Regional NSW 7.3%

Source: CoreLogic RP Data

I can also easily imagine there are plenty of property owners and investors who aren't selling because they don't want to turn a paper loss into an actual loss.

The rising losses can be fully attributed to the end of the mining boom and the steady decline in mining investment.

Companies like BHP Billiton Limited (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG) have been forced to cut back on their expenses and costs, in turn affecting their suppliers and mining services companies.

The completion of a number of giant energy projects has also added to the turmoil.

Compare that to Sydney where just 2.4% of properties were sold at a loss, or 4.4% of those sold during the June quarter in Melbourne.

Capital City Loss
Sydney 2.4
Melbourne 4.4
Brisbane 8.4
Canberra 9.6
Adelaide 10.6
Hobart 10.8

Source: CoreLogic RP Data

However, it may not all be bad news. Investors are much more likely to be selling because they can offset the losses against future capital gains. That may continue to drive down house prices in mining states like WA, allowing first-home buyers to get into the market.

Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »