Australian housing boom sees profitmaking resales climb to record high

An eye-watering number of sellers made a premium from the sale of their homes despite extended lockdowns, with one surprising region seeing 99.5 per cent of all owners make a profit.

Profit making resales hit record highs through the September quarter. Picture: NCA NewsWire / Gaye Gerard

Extended lockdowns did little to dampen homeowner’s ability to make a premium from selling their properties through the September quarter of 2021.

Researcher CoreLogic’s latest Pain & Gain Report found the rate of profitmaking resales across Australia rose to 92.4 per cent through the period, up 50 basis points from the June quarter.

The result marked the highest level of profitability in more than a decade, with the median home garnering a nominal gain of $270,000, which equated to total resale profits reaching $27.3 billion.

CoreLogic’s head of research Eliza Owen said it was another remarkable result given this quarter was marked by lockdowns across Sydney, Melbourne and the ACT.

“The increase in the rate of profitmaking sales is a reflection of strong capital growth across Australian dwelling markets despite Covid-induced disruptions to transaction activity. The three months to September was the fifth consecutive quarter in which the rate of profitmaking sales across Australia increased,” says Ms Owen.

Melbourne property sellers had the highest rate of profitability at 99.5 per cent, achieved at a time when social distancing measures prohibited in-person property inspections. A majority (98.6 per cent) of sales in Sydney recorded a profit, followed by Canberra (98.5 per cent), Brisbane (98.3 per cent), Adelaide (98.1 per cent), Hobart (97.5 per cent), Perth (85.5 per cent) and Darwin with 77.2 per cent.

Melbourne had the highest portion of homeowners make a profit. Photo: David Swift

Regional Australia had a higher rate of profit from resales (93.1 per cent) through the quarter compared to the combined capitals (91.1 per cent).

House resales continued to have a higher chance of nominal gain (95 per cent) than units (86.5 per cent) but the growing affordability challenge is likely to cause the success gap between the dwelling types to close.

Of the properties that sold as a loss, homeowners finished a median of $37,000 down. Total losses for the period totalled $368m, with Ms Owen noting the decline in total losses was more rapid than the gains.

Resales totalled 99,000 during the period, down from 106,000 properties resold in the June quarter.

Homeowners who sold over the three-month period held their properties for an average of 8.8 years, which was consistent on the previous quarter. Generational homes held for more than 30 years had the highest median gain of just over $745,000, but even those retained for less than two years had a median resale gain of $120,000 due to rapidly rising house prices.

With the market set to find a peak in coming years, Ms Owen believes property owners may be incentivised to sell before the average hold period shift higher as more owners look to cash in their long-term gains.

However, in the short term, the levels of profitmaking sales may fall.

“There are accumulating headwinds for property market performance in the coming months, in the form of higher supply of advertised stock, normalising interest rates, affordability constraints and the possibility of tighter lending restrictions,” she said.

“A downswing in Australian housing market values would ultimately impact the profitability of resales, particularly for recent purchasers.”

Originally published as Australian housing boom sees profitmaking resales climb to record high