Australian property delivered a median nominal gain of $285,000 from resales in the June quarter – setting a record high for the series going back to the early '90s.

CoreLogic's latest Pain & Gain report (Q2 2024) analysed approximately 91,000 resales over the period, revealing 94.5% of transactions recorded a nominal gain, one of the highest rates since June 2010. Nominal gains from resales totalled $31.8 billion in the June quarter, up 7.7% from the March quarter.

CoreLogic’s Head of Research Eliza Owen said the record median gain is driven by national housing values hitting fresh record highs each month since November last year.

“It also reflects sellers largely being empowered to time their resale for profit, given relatively stable conditions for mortgage serviceability,” Ms Owen said.

Ms Owen said that as with growth trends across Australia, it is a story of variability with Brisbane claiming the top spot as Australia’s most profitable market, with a profit-making sales rate of 99.1%.

This was followed by Adelaide at 98.7%, and Perth at 95.4%. Darwin and Hobart saw the biggest quarterly increase in the rate of loss-making sales across the capitals, while Melbourne and Sydney have become the second and third least-profitable cities after Darwin.

“The profitability across Brisbane, Adelaide and Perth reflects strong capital growth trends in recent years, which is also contributing to lower hold periods for profit-making sales.”

Looking ahead, Ms Owen said the rate of profit-making sales is expected to continue rising in the September quarter, in line with home values rising.

“However, the housing market faces some headwinds to demand in the form of high interest rates that are ‘higher-for-longer’, high cost of living and constrained affordability.

“Combined with what is looking like a robust spring selling season, the depth of buyer demand to deliver higher and higher profits may be tested in the coming months.”

 On the flipside, the median of losses from resale across Australia was -$40,000, with a median proportional loss of -6.8%, totalling $282 million, up 2.5% from $275 million in the March quarter.

However, that figure was far from the largest combined loss from resales, which was a combined $531 million loss in the three months to November 2020.

Of the loss-making resales across Australia, the majority were units (66.3%), 70.6% of which were in Sydney and Melbourne. Loss-making unit resales in Sydney and Melbourne accounted for almost half of all loss-making sales in the quarter (46.8%).

“Even for loss-making resales with short hold periods and little time to pay down mortgage debt, a -6.8% resale loss is relatively small and implies low risk of default,” commented Ms Owen.

Houses prove more profitable than units

Houses remained more profitable than units through the June quarter, with a profit-making sales rate of 97.2% nationally, compared to 89.4% in the unit segment.

The rate of loss-making sales in the house segment came in at just 2.8% nationally, compared to 10.6% across the unit sector.

“Not only were units around four times more likely to make a loss from resale than houses, but the median nominal gain from house resales was almost twice as large as that of units,” said Ms Owen, coming in at $340,000 and $185,000 respectively.

“Interestingly, at a national level both houses and units saw record high median nominal gains from resale,” commented Ms Owen.

“At a high level the outlook for unit owners looks promising, with unit profitability expected to improve in the short term. Demand for units may increase in the coming months, as buyer demand pivots from the relatively expensive detached house sector.”

Regions outpace capitals

The rate of profit-making sales in the regions (95.7%) remained higher than the capital cities (93.8%) in the June quarter, however pockets of weakness are emerging in parts of regional Australia.

“While resource-based markets generally continue to show an uplift in value and improvement in profitability, the WA Outback North market has seen sellers continue to absorb losses, where values remain 31% lower than the highs of the early 2010s,” said Ms Owen.

“In the tree-change market of Ballarat, Victoria, 6.5% of resales made a nominal loss in the June quarter, up 250 basis points from the March quarter.”

Across the combined regional lifestyle markets analysed, the rate of loss-making sales remains low (2.7%), but is rising.

The rate of loss-making sales in the combined regions was 4.3%, compared to 6.2% across the combined capitals. The incidence of loss-making has been lower in the combined regional markets since June 2020 when regional Australia saw a significant uplift in housing demand through the pandemic period.

Hold period trends

The median hold period of resales across Australia was 8.8 years in the June quarter, which is steady on the March quarter of 2024. This places the median initial purchase date of resales around the September quarter of 2015.

From September 2015 through to the end of June 2024, national home values increased 56.0%. Of the greater capital city and regional markets of Australia, Darwin was the only market to see a decline in this period, of -1.6%.

Profit-making resales had a slightly longer median hold period (8.9 years) than loss-making resales (8.0 years).

Key findings for Pain & Gain, June Quarter 2024

• CoreLogic analysed approximately 91,000 dwelling resales in Q2 2024.
• The incidence of profit-making sales nationally increased to 94.5%.
• The median nominal gain was a record high $285,000 in the quarter, and the total nominal resale profit was $31.8 billion.
• The median nominal loss was -$40,000, and the total nominal resale loss was $282 million.
• Brisbane claimed the top spot as the most profitable city through the quarter, with 99.1% of homes sold making a nominal gain.
• Darwin and Hobart saw the biggest quarterly increase in the rate of loss-making sales across the capitals.
• Houses remained far more profitable than units through the June quarter, with a profit-making sales rate of 97.2% nationally, compared to 89.4% in the unit segment.
• The median hold period of resales across Australia was 8.8 years, which is steady on the march quarter.

View the Pain and Gain Report here. 

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