Australians are making a record $295,000 median profit when reselling their property, despite slowing market conditions, a new report from CoreLogic has revealed.
Analysing 95,000 resales over the September quarter, the latest Pain and Gain report found people selling their homes had hit a record median profit since the series started in the mid-1990s.
Only 5% of resales made a loss, the report found – the lowest level since March 2008. The median loss from resale was steady on the previous quarter at $40,000, but up slightly from the five-year average of $39,000.
Total nominal gains from resale were just under $34bn in the quarter, up from $33.3bn in the previous quarter. Combined losses were $270m, compared with $292.4m in the previous quarter.
CoreLogic’s head of research, Eliza Owen, said the results could be attributed to 0.8% growth in national home values through the quarter on top of reasonably strong housing demand conditions.
“A decline in home values is only a problem for sellers if they have issues servicing home loan repayments, or are in some other circumstance where they need to sell,” she said.
“Otherwise, homeowners can simply hold their properties back from the market until such time as there is stronger buyer demand.”
“That being said, there are still clearly pockets of pain where home sellers need to offload their property in spite of weak market conditions, or values remaining substantially below previous record highs.”
Melbourne was the only capital city market to see an increase in the rate of loss-making sales, with 9.9% of sales recording some loss.
At the other end of the spectrum, Brisbane was the most profitable city for the second consecutive quarter. Of the resold homes in the quarter, 99.4% made a nominal gain, up from 99.2% in the previous quarter, and 97.4% a year ago.
Perth saw one of the biggest increases in the rate of profit-making sales in the quarter, increasing 120 basis points to 96.9%.
Houses remained far more profitable than units through the September quarter, with only 2.9% making a loss compared with 9.4% of units.
Owen said units had always had a higher chance of making a loss, which was attributed to supply factors and the fact that units are the preferred investment dwelling, with low maintenance, lower price points and generally higher rental yields.
“Investors are also potentially in a better position to sell at a loss, because they may be able to offset that loss on future capital gains from property,” she said.
Many of the losses were properties sold between two and four years, she said.
“Three years on from mortgage rate lows, the incidence of loss is rising for those who have held between two and four years,” she said.
