Australian home sellers enjoyed record-high rates of profitability and dollar value returns over the December quarter, according to CoreLogic’s latest Pain & Gain report.

The report, based on data from the December quarter of 2024, analysed 95,300 resales over the period, showing the median nominal gain of $306,000 reached a series high since the series started in the mid-90s.

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

The report showed 94.8% of sellers made a nominal profit across Australia, down from 95.1% in the previous quarter – reflecting a slip in national home values at the end of 2024.

“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.“

Of the 5.2% of resales that made a loss, the median loss was $45,000, up from $40,000 in the previous quarter – above the five-year average of $39,180.

Total nominal gains from resale were $35.6 billion, up from $35.0 billion in the previous quarter, while combined losses jumped significantly from $267 million in the September quarter to $302 million for the most recent quarter.

“Loss-making resales were, on average, held for a shorter amount of time than profit-making sales,” added Ms. Owen, with a median hold period of 9.2 years across all resales, including 9.3 years for profit-making resales, and 7.6 years for those that made a loss.

 Sydney, Melbourne units account for most loss

Sydney and Melbourne accounted for 60.6% of loss-making resales, despite only accounting for 34.2% of total resales in the quarter.

Most of the loss-making resales across Sydney and Melbourne were units, accounting for 47.2% of loss-making resales across Australia.

Drilling down into SA4 sub-regions of Australia, Melbourne – Inner units had the highest number of loss-making resales, at 734 in the quarter.

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

This was followed by 256 loss-making resales in the Sydney – Parramatta unit market, and 163 loss-making unit resales in the Sydney – Ryde market.

Together, these unit markets accounted for almost one-fifth of Australia’s loss-making resales.

Ms. Owen said this mirrored trends at a national level, with units experiencing a loss-making sales rate of 10.1% in the quarter, up from 9.3% in the previous quarter. In each city, houses were more profitable than units.

Houses were far less likely to see a loss, with only 3.0% of houses selling for less than the previous price.

She said this could be attributed to high levels of unit development that was a hangover from a short, strong period of investor activity through the early-to-mid 2010’s, characterised by significant levels of off-the-plan apartment purchases.

“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.”

Fixed rate cliff?

The latest data also shows that more than a third of loss-making resales in the three months to December had a short hold period of up 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,” she added, pointing to the fact that 26.5% of loss-making sales had a hold period of two-to-four-years.

Ms. Owen said this makes sense given how many housing markets are yet to recover record-high values reached in early 2022, just before the RBA began lifting the cash rate target from May of that year.

As of February this year, CoreLogic estimates around a third of suburbs are below the dwelling value in April 2022.

Of the loss-making resales held for two-to-four-years, or ~1,100 sales, just under 40% were across Greater Melbourne, with the SA4 Melbourne – Inner market accounting for 6.7% of loss-making resales in this short hold period.

“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.”

Across the capital cities

• Brisbane claimed the top spot for profit-making resales in Australia, with almost all resales making a nominal gain (99.6%).
• Adelaide was the second most profitable market of the greater capitals and regions across Australia, with 99.1% of resales making a nominal gain.
• Perth had the third-highest rate of profit-making sales across the capital city markets at 97.4% in the quarter.
• Sydney saw the third-lowest rate of profit-making sales across the capital cities behind Darwin and Melbourne but still saw over 90% of resales make a nominal profit (92.5% of resales in the quarter).
• Melbourne was one of two capital cities (alongside Darwin) that had a profit-making sales rate of less than 90% in the December quarter, reaching 89.8% in the three months to November, and falling further to 89.2% in the final quarter of 2024.
• Hobart has also seen a slight deterioration in profitability amid an extended market downturn, where home values in December were 12.2% below the record high in March 2022.
• Across Canberra, 93.3% of homes made a nominal gain from resale, down from 95.9% in the previous quarter.
• Darwin and Regional NT continued to demonstrate the highest incidence of loss-making from real estate resales, at 28.3% and 23.0% respectively.

 Key findings for Pain & Gain, December Quarter 2024

• 94.8% of sellers made a nominal profit in the December 2024 quarter, with a median profit of $306,000. This was a series high for the median nominal gain measure, with Australians continuing to see record gains from home sales.
• The median nominal gain was a record high $306,000 in the quarter, and the total nominal resale profit was $35.6 billion.
• The median nominal loss was -$45,000, and the total nominal resale loss was $302 million.
• Brisbane claimed the top-spot for profit-making resales in Australia, with almost all resales making a nominal gain (99.6%).
• Melbourne was one of two capital cities (alongside Darwin) that had a profit-making sales rate of less than 90% in the December quarter.
• Houses were far less likely to see a loss, with only 3.0% of houses selling for less than the previous price.
• Units had a loss-making sales rate of 10.1% in the quarter, up from 9.3% in the previous quarter.

View the Pain and Gain Report here.