This article is from the Australian Property Journal archive
AUSTRALIAN property sale profits have hit their highest level in more than a decade, as 96% of houses and 90.7% of units resold for a profit over the financial year.
According to the latest Profit and Loss Report from Domain, profit-making sales for residential properties are at their highest level since 2008 for houses and 2011 for units.
“As Australia grapples with record pricing, it is unsurprising that the pool of profit-making sales has risen, as the likelihood of profitability increases as prices rise,” said Nicola Powell, chief of research and economics at Domain.
“This trend is more pronounced for houses than for units and various factors contribute to these differences, including housing preferences, development cycles, and tenure, as units are typically held for shorter periods. Additionally, house prices have generally experienced higher rates of growth compared to unit price.”
Regional Australia is seeing a higher proportion of owners making a profit compared to the capital cities for the first time since 2009.
With the 96.1% of regional house sales and 94.6% of regional unit sales making a profit, compared to 96.0% for capital city house sales and 89.4% for capital city unit sales.
“The remarkable profits we are seeing indicate how valuable it is for Australians to get into the property market if they can. We need to ensure that buying a home is affordable and accessible to everyone, as having an asset that increases in value can really help financial stability in the future,” added Powell.
For house sales, Brisbane saw the greatest proportion of profit-making sales at 99.5%, followed by Melbourne at 97.9%, Perth at 97.1%, Hobart and Adelaide at 96.8%, Sydney at 95.6%, Canberra at 94.0% and Darwin at 88.4%.
While for unit sales, Hobart had the highest proportion of profit-making sales at 96.3%, Brisbane at 95.6%, Canberra at 94.4%, Perth at 91.1%, Adelaide at 89.9%, Sydney at 89.4%, Melbourne at 84.3% and Darwin at 68.2%.
For house sales, Sydney, Canberra and Melbourne saw the greatest median profits, at $655,000, $435,000 and $397,000 respectively.
While for unit sales, Sydney, Hobart and Adelaide saw the greatest median profits at $202,000, $198,000 and $175,000 respectively.
“Losses are the true anomalies in the property market. Due to the cyclical nature, some losses are inevitable, though they remain relatively rare,” added Powell.
“Transactions occurring at critical inflection points – when the market is changing direction – can be particularly challenging to navigate. For example, purchasing at a market peak just before a correction means buyers are paying off a mortgage based on peak prices while experiencing slower equity growth. This situation may lead some sellers to accept a loss based on their individual circumstances, particularly under the current ‘higher for longer’ cash rate.”
