CoreLogic has released its housing market Pain & Gain report for the June 2020 quarter, which reveals that 18.0% investors sold their property for a loss over the quarter, up from 16.8% in the March quarter:
This compared to 11.1% of owner occupiers that sold for a loss over the same period.
The losses were greatest in the apartment segment, which is heavily dominated by investors, where 20.7% of properties sold for a loss, up from 19.8% over the March quarter:
This was roughly double the proportion of houses sold for a loss over the same period.
These results are obviously flattered by the emergency mortgage repayment holiday, which according to APRA 393,467 mortgages were deferred as at 31 August, accounting for 7% of total mortgage facilities.
Once these repayment holidays end over coming months, it is highly likely that a significant number of forced sales will sell for a loss.
The risk is greatest for apartment property investors in Melbourne and Sydney, given rental vacancy rates have ballooned:
And rents have collapsed:
The supply pipeline across Melbourne and Sydney also remains strong despite negative net overseas migration forecast over 2021 and 2022:
Thus, apartment investors in Melbourne and Sydney face the toxic combination of falling prices and rents as many also grapple with unemployment.
