Profitable home sales reach their highest level in 39 years

Profitability increased in 12 of the 15 capitals and the rest of the state’s markets, with the rate of sales at a loss increasing in Melbourne, Hobart and regional Tasmania, albeit from a weak base.

Regional and tree-change markets posted the highest proportion of lucrative sales, with Victoria’s Ballarat regional area reaching 99.7 percent of homes sold for more than the purchase price.

The report, which analyzes the proportion of home resales that generated nominal gains or losses for sellers, is based on approximately 106,000 home resales in the June quarter.

The number of homes sold for more than they were bought climbed to 97,000, a 10% increase from the previous quarter.

Sellers made a total of $ 39.4 billion in nominal gains, an increase of 12.6% from the previous quarter. However, the loss on sales reached $ 1.1 billion, which also increased from the previous quarter.

Nationally, the median profit on resales was $ 265,000 in the three months to June, while the median losses were $ 43,000.

“This number really reflects the extraordinary recovery in home values ​​following a small drop induced by the initial impact of COVID-19,” said report author, CoreLogic Research Officer Eliza Owen.

“Record gross resale profits were also boosted by tight listings and low mortgage rates. “

Homes typically owned for 8.8 years had a median gross profit of $ 265,000. However, Ms. Owen said the recent extraordinary growth in the market has allowed homeowners who resell after just two years to pocket a median return of $ 123,000.

Among those highly profitable resales was a house at 25 Lamrock Avenue, Bondi Beach, which sold for $ 5.6 million in October 2020.

The property traded for just over $ 9 million this month – gross profit of $ 3.4 million in less than a year, according to Ric Serrao, director of Raine. & Horne Double and Bondi Beach.

Mr. Serrao also sold a property at 65a O’Brien Street, Bondi Beach, for $ 5.6 million. It was bought for $ 3.8 million just 12 months ago.

“I have never seen a market where people have made so much money and so quickly,” he said.

Ms Owen said such high levels of profitability could start to encourage vendor participation and reduce typical hold periods, especially as major cities have moved down the road from 2021 lockdowns.

“While profitability is expected to increase across Australia over the next few quarters, it is clear that the for-profit resale rate reflects the trends we are seeing in urban and regional capital growth rates,” he said. she declared.

“As the rate of increase in values ​​slows, as we have started to see every month since April, the momentum in profitability will also slow.

“We are watching for a number of headwinds that could slow or even reverse housing market growth over the medium to long term, including affordability constraints, a tighter credit environment, a resurgence in listing volumes and some economic factors, including a slowdown in the resource sector.

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