CoreLogic’s recent Pain & Gain report for the September Quarter revealed that despite a downturn in market activity, Australian home sellers are achieving record profits.
The study, which analysed 95,000 resales, found the median nominal gain hit an all-time high of $295,000 – the highest since the mid-90s.
Conversely, the median loss remained stable quarter-over-quarter at $40,000, slightly up from the five-year average.
The percentage of homes resold at a loss dropped to 5%, marking the lowest level since March 2008.
The total profit from resales approached $34 billion, a slight increase from the previous quarter, while combined losses decreased, indicating a generally healthy resale market.
While most capital cities saw positive trends, Melbourne recorded the highest rate of loss at 9.9%, though it also saw a decline in the actual number of loss-making sales.
In contrast, Brisbane emerged as the most profitable city for resales, with an impressive 99.4% of homes sold at a gain, continuing its lead from the previous quarter.
The resale market also highlighted a stark contrast between property types, CoreLogic reported.
Houses consistently offered better returns than units, with only 2.9% of houses sold at a loss compared to 9.4% for units. This trend underscores the ongoing preference and profitability of standalone homes over apartments.
Short-term resales have seen a decrease in loss-making outcomes, with homes held for less than two years constituting a smaller fraction of the resale market and showing improved profitability.
“A decline in home values is only a problem for sellers if they have issues servicing home loan repayments or are in some other circumstance where they need to sell,” said Eliza Owen (pictured above), CoreLogic’s head of research.
The typical duration homeowners held onto properties before selling extended slightly to nine years. This longer hold period correlates with better profit margins, especially in a market where short-term gains can be less predictable.
Resource-driven regions showed notable improvement, with the incidence of loss-making resales significantly reduced from the previous years. These areas, particularly in Central Queensland and parts of Western Australia, have seen robust capital growth, which has greatly enhanced resale profitability.
Despite a tempering of overall market conditions and capital growth, Australian homeowners who sold in the September quarter generally saw substantial financial gains.
This trend is supported by strong demand, a resilient lending environment, and strategic holding of assets.
“Homeowners can simply hold their properties back from the market until such time there is stronger buyer demand,” Owen said, suggesting a strategic approach to navigating the current market dynamics.
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