Property “flipping” – short term property trading – remains a lucrative endeavour in Australia and a new analysis reveals that nine out of 10 properties flipped by investors last year sold for a gross profit.
According to CoreLogic’s inaugural Property Flipping Report, almost 90 per cent of houses flipped within a year or two of purchasing made a profit in 2017.
CoreLogic defines “flipping” as the action of buying and re-selling houses within 24 months with the purpose of making a profit.
And it is becoming less common – only 5.7 per cent of property re-sales across the country included properties that were flipped over the year to June 2017, compared to 11.3 per cent in 2002.
Only 1.3 per cent of dwellings resold over the year to June 2017 were held for less than a year, while a further 5.7 per cent were put back on the market within one to two years of ownership. Of those, 89.1 per cent resold within one year made a profit and 89.9 per cent made a profit within two years.
Despite these numbers, CoreLogic believes flipping is again on an upwards trajectory, with a 0.6 per cent increase in properties flipped between one and two years in the past five years.
“Sydney and Melbourne were the most profitable capitals for flipping,” the report said.
“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.”
The proportion of loss-making “flips” is expected to rise in 2018 as Australia’s major property markets start to ease.
Regional NT recorded the least profitable market one year post-purchase, with only 50 per cent of flips profitable, followed by Darwin at 64.7 per cent.
NSW experienced two per cent up of flipping losses compared with Victoria’s 22.7 per cent of houses resold at a loss within one to two years.