Property resales hit 14-year high in profitability despite economic challenges
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Australian property resales have reached their highest rate of profitability since July 2010 in the first quarter of 2024, according to CoreLogic’s latest Pain & Gain report.
The report, which analysed approximately 85,000 resales over the period, revealed that 94.3% of transactions recorded a nominal gain.
This strong performance comes despite persistently high mortgage rates and ongoing economic challenges.
CoreLogic’s Head of Research Eliza Owen said the number of transactions increased 8.5% from the same quarter of last year while national home values rose 1.7% in the quarter.
“Despite the slight drop off in the median nominal gain, the rate of sellers making a profit has improved over the year and is the highest in Australian dwelling sales since July 2010,” Owen said.
The median gross profit was $265,000, down from a revised $268,000 in the final quarter of 2023.
Owen noted this weaker figure was partly compositional, with a higher portion of unit resales through the start of the year than in the previous quarter.
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The combined value of nominal gains from resale was estimated at $28.6 billion in the March quarter, down from $30.6 billion in the December quarter of 2023.
Nominal losses from resales were $278 million in the quarter, down from $302 million in the previous quarter.
Outside of the Northern Territory, Melbourne had the highest rate of loss-making sales of the capital city markets at 9.2%, up from 8.9% in the previous quarter.
Adelaide and Brisbane were tied for the most profitable cities, with a loss-making sales rate of just 1.6% of resales.
Perth showed a remarkable turnaround, with loss-making sales declining to 6.4% from 43.8% recorded in the June quarter of 2020.
Owen said Perth’s strong metrics, including home values up 6.1% in the three months to May and a median selling time of just 10 days, suggest conditions are heavily in favour of Perth sellers.
“Perth values may have grown rapidly in the past 12 months, up 22.1%, however the median dwelling value is still one of the more affordable cities in the country relative to local incomes,” she said.
The rate of profit-making sales in Q1 was higher in the combined regions than in capital city markets, continuing a trend that has been in place since the three months to May 2020.
Of the resales in regional Australia through the March quarter, 95.6% made a nominal gain, compared to 93.5% of resales in the capital city markets.
Houses continued to deliver higher rates of profit-making sales compared to units across Australia.
The report shows 97.1% of house resales made a nominal gain in the March quarter, compared to 89.0% of units.
Owen said the gap between house and unit profits had roughly tripled in the past four years, with nominal gains from houses sitting 85.5% higher than units in the March quarter of 2024.
The median hold period of resales across Australia was 8.8 years through the March quarter, down from 9.0 years in the December quarter of 2023, and 8.9 years in the March quarter of 2023.
Owen emphasised the importance of time in the market rather than timing the market for maximising returns on most resales.
“Generally, the longer a vendor holds a property the higher the returns with vendors selling after 30 or more years attracting the largest median gain of $780,000,” she said.