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

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.

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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.

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