Australian housing resales hit highest profitability since 2010

The latest CoreLogic Pain & Gain report for the March quarter has found the highest rate of profitable resales since July 2010, with 94.3 per cent of 85,000 analysed transactions recording a nominal gain.

CoreLogic’s Head of Research, Eliza Owen, said this trend can be attributed to the rising values of homes offsetting high mortgage rates and cost of living pressures. However, the median gross profit of $265,000 for the March quarter came in under when compared to the amount made in the previous quarter. The report also said the total combined value of resale gains was $28.6 billion, down from the $30.6 billion seen in the December 2023 quarter – confirming the “seasonal decline” in sales.

“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,” she said.

“This increase in the profitability rate across the Australian housing market helps to shore up financial stability for many property owners at a time when higher mortgage costs are starting to take their toll on household budgets.”

The report also suggested that short-term resales have passed their peak, despite fixed terms still playing a part in property resales held for two to four years. For the March quarter, the median hold period of resales was 8.8 years, falling from 9 years in the December quarter.

“As housing values have risen, the rate of loss-making sales within short-held properties has also declined,” Owen said.

“Interestingly though, properties held for two-to-four years have made up a relatively high portion of resales in the March quarter at 15.3%, which may be influenced in part by the expiry of three-year fixed terms.”

According to the report, Adelaide and Brisbane came in joint first for the most profitable capital cities in resales, with only 1.6 per cent of them making a loss. Besides the Northern Territory, Melbourne had the highest rate of loss-making resales in the quarter, rising to 9.2 per cent from 8.9 per cent in the December quarter; this was followed by Sydney at 8.4 per cent, remaining unchanged from the previous quarter. The report also suggested a major growth opportunity for the Perth housing market, with a strong recovery from 43.8 per cent of loss-making resales in the June 2020 quarter for 6.4 per cent in the latest March quarter.

“In the December quarter of last year, Perth managed to improve its position from the second least-profitable capital city for the first time since 2015. The rate of loss-making sales has continued to shrink, and it’s overtaken Sydney and Melbourne,” Owen said.

“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.”

Regional areas also performed better than capital cities in terms of profit-making resales, with the combined regions recording 95.6 per cent of resales making a nominal gain compared to 93.5 per cent in the combined capital cities.

“The rate of loss-making sales in regional Australia has structurally shifted lower from a pre-COVID decade average of 13.0% to 7.2% since March 2020,” Owen said. “This shift is driven by increased demand in lifestyle regional markets, the affordability of major regional centres compared to capital cities, and a recovery in resource-based regional markets.”