The Australian property market has shown remarkable resilience, with the December quarter witnessing an uptick in the rate of profit-making sales and overall transaction numbers, according to CoreLogic.
CoreLogic’s latest Pain & Gain report, analysing around 90,000 resales, found that 94% of transactions recorded a nominal gain, with the median gross profit rising to $310,000.
“The improvement in the key metrics of this report really highlight the improving profitability in the housing market since the recovery trend began in early 2023,” said Eliza Owen (pictured above), CoreLogic’s head of research.
Loss-making resales dipped to 6%, with the total nominal profit from resales reaching $29.9 billion in the December quarter.
“We’ve observed a decline in the number of loss-making sales... even as overall transaction volumes increased...,” Owen said in a media release. “The broad-based increase in profitability and value across the Australian housing market helps to shore up financial stability at a time of stark increases in mortgage costs for some households.”
The CoreLogic report also noted a slight change in short-term resale conditions, with a decrease in resales within a two-year hold period and an increase in those held for two to four years.
“This change reflects homes bought in 2020 and 2021...,” Owen said. “While some of these sales might have been influenced by a rise in mortgage rates, only 3.7% of homes sold during this timeframe ended up making a nominal loss.”
Regional markets outperformed capital cities in terms of profitability, with 95.5% of resales in regional Australia making a nominal gain compared to 93.2% in combined capitals.
“Regional markets... are outperforming capital cities in terms of profitability potentially due to sustained demand, limited housing supply, and a more favourable cost-of-living environment,” Owen said.
The CoreLogic report showed a slight narrowing in the profitability between houses and units.
Houses consistently outperformed units in achieving profit-making sales, with 97% of house resales resulting in a nominal gain, in contrast to 88.2% for units, but as Owen pointed out, “As units become increasingly attractive to buyers... profitability of units will improve.”
The median hold period for resales was nine years, with national home values increasing 63% since November 2014. Owen said that most loss-making sales had been held for less than three years, especially in the greater capital city and regional house markets, with loss-making unit sales typically held for longer due to weaker capital growth performance.
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