But sellers' profits remain high due to increase in home values
Australian property sellers continued to achieve substantial profits in the June quarter, though the proportion of loss-making resales increased slightly, according to Cotality’s latest Pain and Gain report.
The report, which reviewed around 97,000 property resales during the quarter, found that 94.8% of transactions resulted in a nominal gain. While this figure remains above the 10-year average of 91.5%, it represents a marginal decrease from 95% in the previous quarter.
Despite the slight dip in the share of profitable sales, the median nominal gain for sellers reached a new peak, while typical losses declined.
“Across all profit-making resales nationally, we saw a median nominal gain of $315,000 for sellers recorded in the June quarter,” said Eliza Owen (pictured top), head of research at Cotality. “This was a record high, up from $305,000 in the previous quarter, and the decade average of $250,000. Meanwhile, the national median loss fell to $42,000, down from $44,000 in the March quarter and a high of $45,000 in the December quarter of last year.”
The share of loss-making sales rose to 5.2% in the June quarter, up from 5% in March. Nearly 60% of this increase was attributed to units in Sydney and Melbourne, with approximately 2,500 transactions sold at a loss. Owen noted that these losses were mostly concentrated in markets that have yet to recover to previous peak values. “The top ten markets for loss-making resales accounted for a third of all losses in the quarter, compared to one quarter over the decade average,” she said. “Some owners may also be cutting their losses as conditions improve, choosing to sell after holding for long periods.”
Owen, however, indicated that the trend may be shifting. “Between June and August of this year, the likelihood of a loss-making resale has broadly reduced as national home values rose 1.3%, and fewer markets at the suburb-level recorded quarterly falls across Australia,” she said.
New South Wales dominated the list of the most profitable local government areas (LGAs) by median gain in the June quarter. In Kiama, on the state’s South Coast, sellers achieved a median nominal gain of $758,000 after holding properties for nearly 12 years, during which the median dwelling value in the area increased by 120%. Woollahra Council in Sydney’s Eastern Suburbs also featured among the top ten, with a median nominal gain of $575,000.
Regional markets continued to outperform capital cities in profitability, a trend that has persisted for over five years. In the June quarter, 96.4% of regional resales made a nominal gain, compared to 93.9% in capital cities. Of the regional LGAs analysed, 62 recorded a 100% rate of profit-making resales, led by regional South Australia. In contrast, only nine capital city LGAs achieved the same result, six of which were in Adelaide.
Owen observed that the gap in profitability between capital cities and regional areas narrowed further in the June quarter. “The difference in the rate of profit-making sales between capital cities and regions fell 250 basis points in the June quarter, down from 270 basis points in March and a high of 340 basis points in early 2023. In the three months to August, capital city values rose 1.9%, overtaking the 1.6% rise in regional Australia, pointing to a further narrowing ahead,” she said.
Among the capital cities, Brisbane recorded the highest proportion of profit-making sales at 99.7%, along with the largest nominal gain from resale at $400,000. Adelaide followed with a 99.1% profit rate, and Perth at 98.0%. Darwin had the highest proportion of loss-making sales at 20.6%, though it also saw the greatest improvement in profitability. Melbourne, Sydney, Hobart and the ACT followed, with loss-making rates of 10.6%, 7.7%, 7.2% and 6.7% respectively.
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