Property resale profits rise to $18.7bn

Property research group CoreLogic has released its latest Pain and Gain report for the three months ending 30 September, reporting that 87.4 per cent of homes were resold for a profit, up 0.1 per cent compared with the previous quarter.

Property resales over the September quarter delivered a gross profit of $18.7 billion, up by $2.4 billion from $16.3 billion.

Home owners in Hobart experienced the largest resale gains over the September quarter (98.1 per cent), while regional Victoria (96.6 per cent) and regional Tasmania (96.4 per cent) also posted strong returns.

Reflecting on the research, CoreLogic head of residential research Eliza Owen said: “Hobart has experienced particularly large capital gains over the past five years, and this has translated into exceptionally strong results for resellers of both houses and apartments during the past quarter.”

Unlike most regions across the country, a larger proportion of investment properties (98.9 per cent) in Hobart and regional Tasmania resold for a profit (98.9 per cent) in the September quarter, compared with owner-occupied properties (98 per cent).

Nationally, however, 88.9 per cent of owner-occupied properties resold for a profit compared with 83.4 percent of investment properties.

Moreover, the CoreLogic research found that house resellers were more likely than unit sellers to make a return on their resale, with 90 per cent selling for a profit compared with 80.2 per cent of units.

According to CoreLogic, disparity was most evident in Brisbane and Canberra, where units were 6.8 times and 6.7 times more likely to sell for a loss than houses.

“In recent years, there has been a relatively high level of newly constructed apartments in state capitals, especially across Brisbane and the ACT,” Ms Owen observed.

“This oversupply, which contributes to lower prices and higher vacancies, has impacted returns for unit resellers.”

When broken down between capital cities and regional markets, the latter were more likely to record resale profits at 88 per cent, compared with 87.1 per cent of resales across capital cities.

In analysing loss rates, the CoreLogic research found that $764.8 million in gross losses were recorded over the September quarter, accounting for 12.6 per cent of property resales nationally.

Resellers in Darwin were most likely to record a loss (51.7 per cent), followed by regional Western Australia (56.9 per cent) and Perth (63.6 per cent).

The resale trends were also reflected in the median hold periods for profitable house sales across Australia’s capitals, which were highest in Perth (13.1 years) and Darwin (13.5 years) and lowest in Hobart (9.2 years) and Sydney (9.5 years).

[Related: Housing remains ‘severely unaffordable’ despite correction]