Tight listings, record-low mortgage rates and growth in housing values have created impressive returns for resale vendors, with the highest instances of profitability in regional and tree-change markets.
Based on 106,000 resales, 91.5% recorded a nominal profit-making gain from the previous purchase price in the June quarter – the highest level of profitability in a decade, according to CoreLogic’s latest Pain & Gain Report.
The median gross resale profit was $260,000, while the median gross loss was $43,000. The median hold period was 8.8 years.
Profit-making residential sales have increased for four consecutive quarters, with June up by 9% compared to the March quarter, according to Eliza Owen, CoreLogic head of research.
Owen said this “extraordinary recovery” also allowed homeowners to resell at a median return of $123,000 after only two years.
“For those cashing in after over 30 years of holding a property, the median return was $712,000,” Owen said. “Such high levels of profitability may start to encourage vendor participation and bring down typical hold periods, especially as major cities navigate a path out of 2021 lockdowns.”
Profitability continues to skyrocket across regional and tree-change markets. For example, the Ballarat SA4 region alone saw a 99.7% profitability rate, which could easily extend to other Victorian markets where 98.7% of resales were above the purchase price.
However, not all locations recorded a high profitability due to border closures and weak inner-city rental markets. Loss-making resales were recorded in Perth at 63.5%, Darwin at 39.3% and Melbourne at 34.8%.
Regardless, Owen said these low-performing markets still saw “vast improvement” in the June quarter.
“The rate of loss-making resales declined 4.6% across Perth in the June quarter, and 4.7% across Darwin,” Owen said.
