Home sale profits rebound to pre-Covid levels

Nine in 10 homes put on the block at the end of 2020 earned a premium for sellers, as the heat returned to the housing market.

As the property market heats up, most homeowners are making a profit at sale. Xiu Peng sold her Adelaide home at Linden Park for almost $300,000 over the advertised price. Picture: Keryn Stevens

An overwhelming majority of property owners who sold their home at the end of last year to take advantage of rising prices earned a profit, according to CoreLogic.

The property researcher’s latest “pain and gain” report showed profitability in the marketplace rose to pre-COVID levels through the December quarter, with nine in 10 (89.9 per cent) properties selling for a profit.

Total gains from resales completed in the three-month period rose to $31.9 billion, up from $24.8 billion in the September quarter, while losses at re-sale shrank from $1.2 billion to $1 billion.

CoreLogic’s head of research Eliza Owen said the higher incidence of profitability was off the back of increased sales volumes, with the number of sales through the December quarter 20.4 per cent above the five-year average. At the same time, national prices rose 2.3 per cent.

“As property values rose across each state and territory through the December quarter, buoyed by a cash rate reduction through November, the value of profits also increased substantially,” Ms Owen said.

Profit-taking sales rose for both houses and units rose in the surveyed period, with sales at a loss down 7.3 per cent and 18.7 per cent respectively from the September quarter. Owner occupiers (92.2 per cent) were more likely report a gain than investors (84.9 per cent).

Homes sold in the quarter were held for a median of approximately 8.9 years before being taken to market. Those who owned longer had more of a chance for selling for more, with a median hold period of 9.2 years for profit sales and 6.9 years for losses.

Hobart had the highest incidence of profit, at 97.2 per cent. On the other hand, little more than half (51.4 per cent) of properties sold at a premium in Darwin. Following greater Melbourne’s long lasting lockdowns, the December quarter saw a 1.3 per cent rise in profitability to 94.3 per cent.

A reduction in loss-making sales was reported in mining towns, down to 33.4 per cent. Meanwhile, the flight from cities benefited coastal towns, with five of the nine regions measured reporting profit sales rising to 95 per cent. These locations included Geelong (98.5 per cent), the Mid North Coast (96.3 per cent), the Newcastle and Lake Macquarie region (96.7 per cent), the Richmond – Tweed region (also 96.7 per cent) and the Sunshine Coast (96.3 per cent).