Login
iscover
Selling residential property proved to be an advantageous enterprise for Australians in 2024, with the average profit hitting a new record during the September quarter.
Slowing market conditions, declining capital growth and lower clearance rates did not dampen returns for vendors in the second part of the calendar year. According to CoreLogic, Australians made a record $295,000 median profit when reselling their home or investment property in the three months to September 2024.
All together, Australians made a profit of $34 billion during the period, up from $33.3 billion in the June quarter.
CoreLogic’s head of research, Eliza Owen, attributed the new record to strong home value growth of 0.8 per cent across the nation through the quarter, coupled with continued high demand.
But she also noted that the national average masked several markets where values dropped back during the quarter. Even so, Owen said that sellers in those areas were clearly being strategic about when to sell.
“A decline in home values is only a problem for sellers if they have issues servicing home loan repayments, or are in some other circumstance where they need to sell. Otherwise, home owners can simply hold their properties back from the market until such time there is stronger buyer demand,” she commented.
That being said, Owen noted that there are still “pockets of pain where home sellers need to offload their property in spite of weak market conditions, or values remaining substantially below previous record highs”.
CoreLogic’s data showed the incidence of loss-making resales actually fell to a historic low not seen since March 2008, with only 5 per cent of sales over the period resulting in a loss for vendors.
The value of those losses, however, held steady compared to the previous quarter at a median of $40,000 – just a marginal uptick from the five-year average of $39,000.
Looking at the capitals, Melbourne was also the only capital city market to see an increase in the rate of loss-making sales, and the city saw the second-highest incidence of transactions at a loss among the capital cities at 9.9 per cent in the September quarter. Darwin had the highest proportion of losses, with 31.2 per cent of the city’s residential sales costing sellers.
Meanwhile, Brisbane took the title for the most profitable city for the second consecutive quarter, with 99.4 per cent of sales over three months resulting in a nominal gain.
But while location was a factor in the level of success for vendors across the quarter, property type also had an impact on whether sales returned a profit.
Houses posted the strongest results in the September quarter, with only 2.9 per cent making a loss compared to 9.4 per cent of units.
Owen attributed this uncertainty in the unit market to the greater level of supply found in the subsector, giving buyers more bargaining power, as well as to the type of seller who is more likely to be leveraging property on the apartment market.
Investors make up a high proportion of unit owners, drawn to their low maintenance, lower price points and generally higher rental yields.
When it comes to selling, they may be prepared to cut their losses to rebalance their portfolios, with Owen noting “investors are potentially in a better position to sell at a loss, because they may be able to offset that loss on future capital gains from property”.
Owner-occupiers, on the other hand, are more likely to hold on until favourable selling conditions emerge, if they have that luxury.
Of the sales that went through in the September quarter, properties were held for an average of nine years, up from 8.8 years in the previous quarter. The longer the hold period, the higher likelihood of a profit-making resale, with properties that were sold for a profit held on average of 9.1 years, while properties traded at a loss were owned for eight years.
Generally, shorter hold times are much more likely to result in a loss for sellers, and Owen noted that the trend is one the rise.
“Three years on from mortgage rate lows, the incidence of loss is rising for those who have held between two and four years,” she explained.
ABOUT THE AUTHOR
Juliet Helmke
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
You are not authorised to post comments.
Comments will undergo moderation before they get published.