Global data analytics provider CoreLogic has released its first Property Flipping Report, which provides a national analysis of properties that were ‘flipped’ (bought and re-sold within a short time frame with the purpose of making a profit) in 2017.
The research measures flips within one year of purchase and within one to two years of purchase. It also tracks national trends in flipping over a 20-year period, from June 1997 to June 2
- Nationally, the vast majority of properties (almost nine in ten) in 2017 were flipped for a profit. This included properties re-sold within a year of purchase (89.1 per cent) and those re-sold within one to two years (89.9 per cent).
- Property flipping accounts for only a small percentage of property sales overall. Only 1.3 per cent of dwellings resold over the year to June 2017 were previously held for less than a year. A further 5.7 per cent were put back on the market within one to two years of ownership.
- Historically, the rate of property flipping has fallen. Over the year to June 2017, 5.7 per cent of property re-sales across the combined capitals comprised properties that were flipped within one to two years of purchase. This compares to 11.3 per cent in 2002.
- However, property flipping is now on a slight upwards trajectory. Across the combined capitals, the past five years has seen a 0.6 per cent increase in properties flipped between one and two years (5.7 per cent in 2017 v 5.1 per cent in 2012) and a 0.2 per cent increase in properties flipped within one year of purchase (1.2 per cent in 2017 v 1.0 per cent in 2012). This trend is mirrored across regional Australia.
- Flipping is more prevalent across the Eastern states. The highest rate of flipping occurred in Sydney, where 6.8 per cent of property re-sales over the year were flips between 1 and 2 years of property ownership. Regional Queensland (6.6 per cent) and Melbourne (6.4 per cent) also recorded a higher percentage of property sales as flips.
- Sydney and Melbourne were the most profitable capitals for flipping. Regional NSW (94.5 per cent) recorded the highest percentage of flips at a profit within one to two years of purchase, followed by Sydney (94.3 per cent) and Melbourne (93.7 per cent). All trended above the national average of 89.9 per cent.
- Darwin was the least profitable capital. Around three in 10 (29.7 per cent) properties flipped within one to two years of purchase sold for a profit, followed by around half (52.3 per cent) in Perth. Regional NT recorded the least profitable market one year post-purchase. Only 50 per cent of flips were profitable, followed by Darwin at 64.7 per cent.
Key regional variations
- Over nine in 10 flips in Sydney and regional New South Wales were profitable in 2017, reflecting the recent high growth in property values. In Sydney, only 5.7 per cent of flips within one to two years of purchase were at a loss. This compares to 37.6 per cent a decade ago.
- The Illawarra region experienced the highest level of flips in NSW (8.7 per cent of resales) within one to two years, and the highest annual increase in flipping (up 1.7 per cent on 2016). Illawarra was also one of the most profitable regions in NSW, with only around two per cent of properties flipped at a loss.
- Most flips in Victoria occurred in South East Melbourne (7.8 per cent of resales) and North West Melbourne (7.6 per cent of resales) for properties held for one to two years. These areas also recorded the second and third highest most profitable flips for resales between one and two years (3.7 per cent and 3.5 per cent losses respectively).
- The Mornington Peninsula was the most profitable region for flipping with 1.8 per cent of properties flipped at a loss between one to two years, and 3 per cent within one year. Bendigo recorded the highest percentage of sales flipped at a loss (22.7 per cent of those resold within one to two years, and 20 per cent of resales flipped within a year).
- Property flipping was most prevalent in the Gold Coast, comprising 7.9 per cent of re-sales for properties held between one and two years in 2017. The region also experienced the biggest growth in flipping, up 1.3 per cent on a year ago.
- The area most likely to turn a profit was Moreton Bay North (95.6 per cent profitable), for properties sold between one and two years. The highest percentage of losses occurred in Townsville where half (48.8 per cent) of properties that were owned for between one and two years sold at a loss (up 5.9 per cent on 2016).
- Western Australia is one of two states/territories (along with the Northern Territory) where losses from flipping were at a high in 2017. In Perth, 47.7 per cent of properties flipped within one to two years of purchase sold for a loss.
- North East Perth recorded the highest losses, with half of all flips between one and two years at a loss. Bunbury, Inner Perth and Wheatbelt were the only regions where the percentage of losses for flips between one and two years has slightly declined.
- Properties flipped within 1 year in South Australia performed better than those flipped within one to two years. West Adelaide saw the highest annual increase in flips for properties resold between one and two years (up 1.2 per cent since 2016); Barossa Yorke Mid-North saw the largest decline (down 2.0 per cent since 2016).
- The SA outback saw the highest losses between one and two years at 45.5 per cent, followed by Barossa Yorke Mid-North at 27.6 per cent. Barossa Yorke Mid-North saw the highest losses within one year at 36.4 per cent.
- Property flippers in the Northern Territory experienced a higher likelihood of losses as a, compared to sellers in other states. Seven in ten (70.3 per cent) flips within 1 to 2 years and three in ten (35.3 per cent) flips within a year were unprofitable in Darwin in 2017. Regionally, half of properties sold within a year flipped for a loss, and 40 per cent of those sold after a year.
Source: Core Logic