The new millionaires’ row: Where home sellers make million-dollar profits

Long-term home owners selling in sought-after suburbs are making million-dollar profits as housing profitability soars to record heights.

Some 96 per cent of house sales made a profit in the last financial year, the highest since 2008, Domain’s Profit and Loss Report, released on Thursday, shows. For units, 90.7 per cent of sales made a profit.

The figures come as Australian property prices have soared over the past several years, underpinning gains for the vast majority of vendors.

Domain chief of economics and research Dr Nicola Powell said the record number of homes resold for a profit reflected home owners holding their properties for the long term.

“That tells us that the vast majority of home owners have owned their property for a number of years, and probably many of them have bought prior to that 2020 upswing in price where we saw prices rise nationally,” Powell said. “When you look at the dollar returns, they’re significant.”

In Melbourne, 97.9 per cent of house resales made a profit last financial year. In Sydney, 95.6 per cent of houses sold in the same time period made a profit.

Brisbane was the best performer of all capital cities, with 99.5 per cent of house resales recording profits.

“The vast majority of home owners, property owners, are walking away with a profit. It really underpins the reasoning of why property is really viewed as that vehicle to building financial wealth and security,” Powell said.

Powell said people were choosing to stay in their homes for longer, which has contributed to a reduction in short-term sales, in which owners resell within two years.

She added some recent buyers were deterred from putting their homes on the market again because of the costs associated with selling property.

Home sellers are making million-dollar profits in some suburbs.Credit: Steven Siewert

“When you factor in things like stamp duty, legal fees, moving costs, et cetera, particularly in a market like Sydney, where it is extraordinarily high-priced, it helps paint that picture of why short-term resales have declined,” Powell said.

House sellers made the largest profits in Davidson, on Sydney’s northern beaches, at a median $1.3 million in the 12 months to June. It was followed by Mona Vale at $1,264,850.

Melbourne’s largest profits were reaped by Middle Park house sellers, at a median $1.24 million.

Brisbane’s Pullenvale was next at a median $1,237,500 profit for house sellers.

Although no WA suburbs were in the top 20, Rossmoyne in Perth made the million-dollar profit club, with a median gain for house sellers of $1.01 million.

Ray White head of research Vanessa Rader said a reduced supply of homes for sale paired with demand from increased population growth across Australia has pushed up house prices, resulting in greater profits for a smaller pool of sellers.

“We’ve seen a huge growth in population, in terms of quantum number of people that have come here, and we’ve been in a situation where we haven’t seen a lot of new supply,” Rader said.

“When the market is quite tight, we see people sit on their hands and just kind of wait. In the rental market, we’ve seen historic vacancy lows, and we’ve seen rental growth. As a result of that, with that scarcity of stock, we’ve also seen listing numbers lower than they have been for quite some time.”

House prices have soared over the long term, bolstering property profits.Credit: Penny Stephens

Rader said resale profits would always be high in affluent suburbs like Neutral Bay in Sydney’s north shore, where house sales raked in a median profit of $1,095,000 in the 12 months to June.

“Areas like that are always going to be in hot demand … if you’re looking at buying a property in that location, it’s very restrictive, so that’s why that’s probably seen that kind of uplift in terms of value,” she said.

Quantify Strategic Insights head of data and insights Angie Zigomanis said the top end of the housing market would always deliver healthy returns for sellers, while losses were likely felt in the unit sector.

“[Properties] that have probably shown a loss would be something that’s been held either short term, or where individual circumstances maybe required someone to sell quicker ... and the losses would be in certain high-density apartment areas,” he said.

Armadale and Docklands were among the Melbourne suburbs where units sold at a loss, recording median losses among the loss-making sales of $96,500 and $71,500, respectively. The Melbourne CBD’s median loss was $57,000 among its loss-making sales, which made up 35.6 per cent of sales.

Units selling in the Sydney suburbs of Glebe, Manly and Mosman all recorded losses, where the median losses among the loss-making sales were $93,500, $87,500 and $76,000.

Zigomanis added that long-held properties were likely to bring in larger gains, and downsizers and people who bought their homes more than 30 years ago were likely to make the largest returns.