- CoreLogic’s latest Pain & Gain Report, issued today, suggests Australia’s real estate resiliency continued through the September 2021 quarter
- Profitable resales in Australia increased to 92.4 per cent in the September 2021 quarter, up 50 basis points from the June quarter
- CoreLogic head of Research Eliza Owen said it was another remarkable outcome given the September quarter was highlighted by lockdowns in Sydney, Melbourne and the ACT
- Regional Australia had a greater percentage of profit from resales in the quarter, at 93.1 per cent
- Ms Owen cautions that headwinds may be be accumulating for the property market
CoreLogic’s latest Pain & Gain Report, released today, suggests Australia’s real estate resiliency continued through the September 2021 quarter.
Profitable resales in Australia increased to 92.4 per cent in the quarter, up 50 basis points from the June quarter. Profitability reached its greatest level in more than a decade in the three-month period ending September 30.
CoreLogic head of Research Eliza Owen said it was another remarkable outcome given the September quarter was highlighted by lockdowns in Sydney, Melbourne and the ACT.
“The increase in the rate of profit-making sales is a reflection of strong capital growth across Australian dwelling markets despite COVID-induced disruptions to transaction activity,” Ms Owen said.
“The three months to September was the fifth consecutive quarter in which the rate of profit-making sales across Australia increased.”
The report examined about 99,000 dwelling resale transactions during the period, a decrease from 106,000 resale events in the June quarter.
Ms Owen attributed the decrease to social distancing restrictions, particularly the inability to physically inspect property across Melbourne, which weighed on transaction activity.
The national median nominal gain was $270,000, with total resale gains of $27.3 billion, whereas the national median loss was $37,000, for a total loss of $368 million.
According to Ms Owen, the combined value of profit and loss declined throughout the quarter, although the decline in overall losses was faster.
“Resales had a typical hold period of 8.8 years, which was consistent on the previous quarter,” she said.
“However, as the market finds a peak over the next couple of years, this may incentivise more resales and we may see the average hold period shift higher, as more owners look to cash in their long-term gains.
“Properties held for more than 30 years had the highest median gain of just over $745,000.
The highest nominal gains per year were achieved by those sellers on the other end of the spectrum, who have held property for two years or less.
“The median gain on resales of property held for less than two years was $120,000,” Ms Owen said.
Regional Australia had a greater percentage of profit from resales in the quarter, at 93.1 per cent, while the combined capitals still had a relatively high proportion of profit-making sales, at 91.1 per cent.
Loss-making sales were usually larger in resource-based economies, but they are exhibiting the fastest indications of turnaround.
House resales continue to outperform units in terms of nominal gain (95 per cent versus 86.5 per cent). Ms Owen claims the profitability difference between the two segments is closing.
With home values forecast to rise more across the country through the December 2021 quarter, the level of profit-making sales is likely to rise further in future quarters.
Ms Owen cautions, however, that headwinds appear to be accumulating for the property market.
She said the headwinds come in the form of “higher supply of advertised stock, normalising interest rates, affordability constraints and the possibility of tighter lending restrictions”.
“A downswing in Australian housing market values would ultimately impact the profitability of resales, particularly for recent purchasers,” she said.