Property investment: The waiting game explained
The Kink's 1965 hit Tired of Waiting for You could be the anthem of many property investors. They've spoken to their mortgage broker, spent their money on that Whitsunday Shire property and are left tapping their feet waiting for the ideal time to sell and make capital gains.
But how long should you wait before selling your investment property? To quote another song from the British four-piece, All Day and All of the Night.
The most recent Pain and Gain report from CoreLogic RP Data shone some much-needed light on how effective the waiting game can be.
How long should you wait?
The report, which was an analysis of the June quarter of 2015, found three key characteristics among home sales in Australia:
- The average home was owned for 9.9 years before it made a profit from resale
- For an investment to double its previous purchase price, owners held onto it for an average 16.4 years
- Of the homes resold for a loss, the average duration of ownership was 5.3 years
Risk vs reward
On the whole, property is proving a lucrative investment for most. Over the quarter, losses from resale amounted to $411.3 million – or $65,585 per sale. While it sounds like a high amount, the risk might be worth the reward.
Profit-making sales were a particularly high $16.1billion, rewarding savvy home owners and investors with an average $259,174 per house.
In fact, 90.9 per cent of properties resold throughout the June quarter made a profit, while a staggering 30.8 per cent at least doubled the initial investment price.
90.9 per cent of properties resold throughout the June quarter made a profit.
Feeling out the market
As home values continue to climb, it opens the door to quicker capital gains, as CoreLogic's Senior Research Analyst, Cameron Kusher, explained.
"We've seen the proportion of loss-making resales continue to trend lower over recent months, which are mirroring broader housing market conditions where values generally continue to rise," he said.
Of course, success depends on various factors, such as the price you purchased the property for, your home loan characteristics and the speed at which your Whitsunday Shire property has inflated in price. Properties in regional areas of Queensland had a 17.1 per cent chance of making a loss, and an 82.9 per cent chance of turning a profit, the report showed, so there is good potential in the area.
Do you need property investment advice and information in the Whitsunday Shire? The team at Eclipse has local knowledge and financial expertise to help you get the most of your money. Contact our friendly team on (+61) 7 4946 7359 for a chat.