Australian vendors masquerade as bandits
CoreLogic’s Pain & Gain report for the June quarter revealed the highest level of profitability for real estate sellers in a decade:
Main findings for Pain & Gain, June 2021 quarter
- Approximately 106,000 home resales were analyzed for the Pain & Gain report for the June quarter.
- Of these, 91.5% recorded a nominal profit gain over the previous purchase price.
- The median retention period for these resales was 8.8 years.
- Homeowners who resold after just two years pocketed a median return of $ 123,000.
- Homeowners who cash in after more than 30 years of owning a property earned a median return of $ 712,000.
- 99.7% of residential properties resold in the Ballarat SA4 area in the June quarter saw a gain for sellers.
- In the Victoria area, 98.7% of all home resales in June registered a nominal gain.
- In Sydney, 97.6% of homes sold for nominal capital gain, the highest level since 1982.
- The main drivers of record gross resale profits are tight listings and low mortgage rates.
- Sales at a loss were affected by border closures and weak downtown rental markets.
The following graph shows the national percentage of properties sold at a profit (91.5%) relative to capital growth:
Profitability is particularly high in capital cities, with the exception of Perth and Darwin:
While the proportion of homes sold at a profit in the June quarter (94.4%) was much higher than for units (84.7%):
As expected, the profits are even higher when a property has been owned for a long time:
Commenting on the report, CoreLogic’s head of research, Eliza Owen, noted that “Nationally, sales of for-profit residential properties have increased for four consecutive quarters”:
The typical median hold period of all resales for the quarter was 8.8 years, with a national median gross resale profit of $ 265,000. The median gross losses for the same period were – $ 43,000â¦
“Such high levels of profitability can begin to encourage supplier participation and reduce typical hold periods, especially as major cities move away from the bottlenecks of 2021” …
“While profitability is expected to increase across Australia over the next few quarters, it is clear that the rate of profitable resales reflects the trends we are seeing in urban and regional capital growth rates.”
“As the rate of increase in values ââslows, as we have started to see every month since April, the momentum in profitability will also slow.”
Full report available here.