Australian property: Owners make millions from selling houses

It’s the best time in 10 years to make a profit from selling property, with owners in one state raking in millions from their places.

Sydneysiders have been making millions from Australia’s property boom as homeowners right around the country cash in, with new research showing it’s the best time in a decade to make a profit from the housing market.

Just last week, a renovated four-bedroom house in the Sydney inner west suburb of Haberfield saw an unbelievable result when it sold at auction for $2.02 million above the reserve, going under the hammer for over $7 million.

It comes as the proportion of homes that sold for profit hit a high in the June quarter for the first time in 10 years, due to a shortage of options, low interest rates and soaring prices, according to CoreLogic data

More than nine in 10 homes sold were profitable across Australia, while Sydney broke records with 97.6 per cent of houses sold making a profit – the highest level in 39 years.

Standout suburbs included the northern beaches, Camden and Hawkesbury, with 97.7 per cent selling for more than the purchase price.

The Haberfield home that sold for $2 million over its reserve. Picture: Supplied

Stories of owners making crazy profits have been hitting the headlines. In April, a Sydney home sold for $1 million more than the vendor paid for it just five months after purchasing it.

Bought for $1.7 million, the owner of the northern suburb house in Marsfield had obtained DA approval to build a duplex on the site, sending the price skyrocketing.

There was also a six-bedroom house in North Bondi that was purchased in 2019 for $6.3 million and snapped up earlier this month for $11.2 million, despite no material improvements being made to the dwelling.

CoreLogic’s head of research Eliza Owen said nationally the extraordinary recovery in housing values followed a small downswing induced by the initial impact of the pandemic.

She said property owners who were reselling after only two years were pocketing a median return of $123,000.

“For those cashing in after over 30 years of holding a property, the median return was $712,000,” she 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.”

The huge profits could prompt more people to put their home on the market. Picture: NCA NewsWire / Gaye Gerard

Pockets of loss

But it wasn’t the same story across all Sydney suburbs. Burwood, Parramatta and Strathfield recorded the biggest proportion of loss-making sales at 18.3 per cent, 14.6 per cent and 12.7 per cent.

Ms Owen warned profit making resales weren’t occurring nationwide as pockets of risk and high concentrations of nominal loss were recorded in specific locations.

An analysis of local government area housing markets saw a high rate of loss-making resales across inner-city areas such as Perth with 63.5 per cent, Darwin with 39.3 per cent and Melbourne at 34.8 per cent.

Regional growth

But the money bonanza wasn’t confined to Sydney when it came to NSW, with Central Coast real estate agents reporting a boom as well.

A recent four bedroom, two bathroom property sold on Scenic Rd in Killcare Heights had a price guide of $4.3 million but went for $5 million without the new owners ever stepping through the doors. It last sold three years ago for $2.7 million.

Another property in the area was forecast to sell for between $1.8 million and $2 million but went to a US buyer via a virtual auction for $2.2 million. The two bedroom property was last sold four years ago for $1 million.

Across Australia, a house was typically held for a median of 8.8 years, with a gross profit of $265,000 made on a sale.

The median gross losses for the same period was $43,000.

CoreLogic’s head of research Australia, Eliza Owen, said there may be some easing of skyrocketing places. Picture: Supplied

Regional Victoria’s Ballarat region achieved a record high rate of profitability with 99.7 per cent of resales in the June quarter achieving gains, CoreLogic found.

Despite housing values increasing 13.5 per cent in the 12 months to June, Ms Owen said quarterly figures indicated the rate of growth was starting to slow.

“While profitability is expected to trend higher across Australia in the coming quarters, it is clear that the rate of profit-making resales mirrors the trends we’re seeing in city and regional capital growth rates,” Ms Owen said.

“As the rate of increase in values slows, as we have started to see each month since April, so too will the momentum in profitability. We’re monitoring a number of headwinds that may drag on, or even reverse housing market growth in the medium to long term, including affordability constraints, a tighter credit environment, a resurgence in listings volumes, and some economic factors including a slowdown in the resources sector.”