Australian property sellers make highest profits seen in 30 years

The latest Pain & Gain report from CoreLogic has recorded, for the December 2024 quarter, the highest levels of profitability and dollar value returns from Australian property sales in the last 30 years.

Despite 94.8 per cent of sellers making a nominal profit – with the median sitting at $306,000 – median losses on property sales had also risen by $5,000 quarter-on-quarter to $45,000. The Australians who made profit-making resales had stayed in their property for a median 9.3 years, compared to 7.6 years for those that made a loss.

The report also indicated that houses were more likely to make their sellers a profit, with only three per cent of houses selling for less than the prices they were bought for; on the other hand, 10.1 per cent of units sold at a loss in the December quarter, jumping by 0.8 per cent from the previous period.

“Despite mixed market conditions, declining capital growth and lower clearance rates, Australian property continues to deliver strong profitability,” Eliza Owen, CoreLogic’s Head of Research, said.

“The slight decline in profit-making resales coincided with a -0.3% drop in national home values. This subtle increase in loss-making sales makes sense, because any decline in real estate values increases the chance of loss-making sales occurring.

“Given the strong relationship between capital growth and the rate of profitability and expected further easing in the cash rate this year, the rate of profitability from home resales will likely recover in 2025.”

Across the capital cities, Brisbane had the highest proportion of profit-making resales (99.6 per cent) in the December 2024 quarter, followed by Adelaide (99.1 per cent), Perth (97.4 per cent), Hobart (94.7 per cent), Canberra (93.3 per cent), Sydney (92.5 per cent), Melbourne (89.8 per cent), and Darwin (71.7 per cent).

Sydney and Melbourne together accounted for 60 per cent of loss-making resales during the quarter, despite only accounting for 34.2 per cent of total resales. Units were held responsible, making up 47.2 per cent of the resales that resulted in a loss.

“The off-the-plan apartment boom has clearly meant lasting losses for sellers in Sydney and Melbourne,” Owen said.

“This meant elevated unit supply while demand in the investor market was cut off by tightening lending conditions in the late 2010s. The result has been much stronger growth in houses nationally in the past decade than units, at 80.5% and 38.5% respectively.”

While the broader data indicated property owners were holding on for longer, more than one-third of the properties that were sold at a loss during the quarter had only been held for up to four years. Similarly, 26.5 per cent of total loss-making sales had only been held for two to four years.

“Short selling times can increase the risk of making a loss, because you expose yourself to short-term cyclical movements, where value gains in property are generally long term,” Owen said.

“The high incidence of loss among Melbourne resellers in such a short hold period reflects other indicators of financial stress in this market, such as weaker economic outcomes for the city since the pandemic, elevated listings volumes and weaker property market conditions more broadly.”