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Australian property has delivered a record median nominal gain of $285,000 from resales in the June quarter, according to CoreLogic’s latest Pain & Gain report for Q2 2024.
This figure sets a new high for the series, which dates back to the early 1990s. The report analysed approximately 91,000 resales during the period, revealing that 94.5 per cent of transactions recorded a nominal gain, marking one of the highest rates since June 2010.
Total nominal gains from resales reached $31.8 billion in the June quarter, a rise of 7.7 per cent from the March quarter.
CoreLogic’s head of research Eliza Owen said that the record median gain is largely driven by national housing values, which have been 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,” Owen said.
Brisbane emerged as Australia’s most profitable market, boasting a profit-making sales rate of 99.1 per cent, followed closely by Adelaide at 98.7 per cent and Perth at 95.4 per cent.
In contrast, Darwin and Hobart recorded the most significant quarterly increases in the rate of loss-making sales among the capitals, while Melbourne and Sydney ranked as 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,” Owen said.
Looking ahead, Owen predicted that the rate of profit-making sales is expected to continue rising in the September quarter, aligned with ongoing increases in home values.
However, she said that the housing market faces challenges such as persistently high interest rates, rising living costs, 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,” she said.
On the other hand, the median loss from resale across Australia was -$40,000, with a median proportional loss of -6.8 per cent, totalling $282 million, up 2.5 per cent from $275 million in the March quarter.
Despite this, the current losses are significantly lower than the $531 million combined loss recorded in the three months to November 2020.
Among loss-making resales, units constituted the majority at 66.3 per cent, with 70.6 per cent of these losses occurring in Sydney and Melbourne. Loss-making unit resales in these two cities accounted for almost half of all loss-making sales in the quarter (46.8 per cent).
“Even for loss-making resales with short hold periods and little time to pay down mortgage debt, a -6.8 per cent resale loss is relatively small and implies low risk of default,” Owen said.
Houses proved to be more profitable than units throughout the June quarter, with a profit-making sales rate of 97.2 per cent nationally, compared to 89.4 per cent in the unit segment.
The rate of loss-making sales in the house segment was just 2.8 per cent nationally, in stark contrast to 10.6 per cent 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,” Owen said, with house resales showing a nominal gain of $340,000 compared to $185,000 for units.
Despite the challenges faced by units, Owen expressed optimism for the future: “Interestingly, at a national level both houses and units saw record high median nominal gains from resale.
“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.”
[RELATED: Total dwelling values approaching $11tn]
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