Key takeaways
Profits on property sales reached their highest level in over a decade, with 96% of houses and 90.7% of units across Australia reselling for a profit last financial year.
A higher proportion of homeowners in regional areas walked away with a profit compared to the cities.
The median profit made across combined capitals was $395,000, compared to the median loss of $73,000.
Brisbane was the best city performer, with 99.5% of houses and 95.6% of units making a profit.
The suburbs that are leading profit gains are dominated by Generation X and older Millennials.
Australia’s property market has once again demonstrated its resilience and unparalleled potential for wealth creation, with the latest Domain Profit and Loss Report revealing that property sales have reached record-breaking profit levels.
The report, which examines sales across the nation, shows that an impressive 96% of houses and 90.7% of units resold for a profit in the last financial year—figures that haven’t been seen since 2008 for houses and 2011 for units.
These findings are a powerful reminder of the enduring value of property investment in Australia, even in a landscape marked by economic challenges and fluctuating market conditions.
The strength of the property market is not just a testament to the demand for housing but also highlights the critical role real estate plays in financial security for many Australians.
Record-breaking profits across the nation
According to Domain’s report, the proportion of profit-making sales has reached heights not seen in over a decade, a clear indication that property remains a robust investment.
Nationally, 96% of houses are resold for a profit, a figure that underscores the ongoing strength of the housing market.
For units, the percentage of profit-making sales is slightly lower at 90.7% but still represents a significant uptick compared to previous years.
This trend is particularly evident in Australia’s regional areas, which have outperformed urban centres for the first time since 2009.
The report reveals that 94.6% of regional units sold at a profit, compared to 89.4% in the cities.
This reversal of a long-standing trend suggests a shift in buyer preferences, likely spurred by the pandemic, as more Australians seek the lifestyle benefits and affordability that regional living offers.
Table 1. The proportion of profit and loss-making sales.
|
Location |
Houses | Units | ||
| Profit | Loss | Profit | Loss | |
| Australia | 96.0% | 4.0% | 90.7% | 9.3% |
| Combined capitals | 96.0% | 4.0% | 89.4% | 10.6% |
| Combined regionals | 96.1% | 3.9% | 94.6% | 5.4% |
| Sydney | 95.6% | 4.4% | 89.4% | 10.6% |
| Melbourne | 97.9% | 2.1% | 85.3% | 14.7% |
| Brisbane | 99.5% | 0.5% | 95.6% | 4.4% |
| Adelaide | 96.8% | 3.2% | 89.9% | 10.1% |
| Perth | 97.1% | 2.9% | 91.1% | 8.9% |
| Canberra | 94.0% | 6.0% | 94.4% | 5.6% |
| Hobart | 96.8% | 3.2% | 96.3% | 3.7% |
| Darwin | 88.4% | 11.6% | 68.2% | 31.8% |
Brisbane takes the lead
Among the capital cities, Brisbane has emerged as the clear leader, with 99.5% of houses and 95.6% of units reselling at a profit.
This remarkable performance is a testament to the strong demand for property in Queensland’s capital, which has become an increasingly attractive market for both investors and homebuyers.
The city’s high profit-making sales reflect a combination of factors, including population growth, economic resilience, and a strong local property market.
Brisbane’s stellar performance contrasts with Sydney and Melbourne, where while still profitable, the percentage of profit-making sales is slightly lower.
Sydney saw 95.6% of houses and 89.4% of units resell for profit, while Melbourne recorded 97.9% for houses and 85.3% for units.
These figures highlight the varying dynamics at play across different cities, with factors such as housing affordability, local economic conditions, and market cycles all influencing profitability.
Regional markets: the unexpected stars
The report also highlights the performance of Australia’s regional markets, which have consistently outperformed their urban counterparts in terms of profitability.
This trend, which began in 2021, has seen regional units selling at higher profit margins than those in the cities, reversing a 12-year trend.
Lower upfront costs, greater pricing resilience, and a structural change in buyer preferences—driven by the shift towards remote work and lifestyle changes—are key factors contributing to this shift.
For the first time in over a decade, a higher proportion of homeowners in regional areas walked away with a profit compared to those in the cities.
This is a significant development, as it suggests that regional markets are no longer just secondary options but are becoming prime investment opportunities in their own right.
The resilience of regional property markets during economic fluctuations, combined with their affordability, makes them an increasingly attractive option for both investors and homebuyers.
- Also read:Perth housing market update | September 2024
- Also read:Vacancy Rates Hold Steady at 1.3% | SQM Research
- Also read:Brisbane housing market update | September 2024
- Also read:Is the Rental Boom Over? The Latest on Easing Rent Growth | Property Insiders
- Also read:Sydney housing market update | September 2024
Generation X and older millennials: the biggest beneficiaries
Another key takeaway from Domain’s report is the identification of Generation X and older Millennials as the primary beneficiaries of the current market conditions.
This demographic, typically aged in their late 30s to late 40s, has been able to leverage their established positions on the property ladder to capitalize on the recent price boom.
The report highlights that suburbs dominated by these age groups have seen substantial wealth growth across various income levels.
This group has been particularly adept at navigating the market, using their experience and financial resources to make the most of the opportunities presented by rising property prices.
The ability to hold onto properties longer and benefit from substantial capital gains has allowed these demographics to build significant wealth through property, reinforcing the importance of long-term investment strategies in real estate.
Substantial profits, but losses still occur
While the overall picture is one of substantial profits, the report also acknowledges that losses, though rare, do occur.
The median profit made across combined capitals was $395,000, a figure that dwarfs the median loss of $73,000.
For houses, Sydney, Melbourne, and Canberra led the way in terms of dollar gains, with median profits of $655,000, $397,000, and $435,000, respectively.
For units, Sydney topped the list with a median gain of $202,000, followed closely by Hobart at $198,000 and Adelaide at $175,000.
Table 2. The dollar and percentage of profit-making sales.
|
Location |
Houses | Units | ||||||
| $ gain | % gain | $ loss | % loss | $ gain | % gain | $ loss | % loss | |
| Australia | $326,000 | 79.5% | -$60,000 | -9.7% | $171,000 | 40.8% | -$45,000 | -8.3% |
| Combined capitals | $395,000 | 84.0% | -$73,000 | -9.4% | $163,000 | 37.0% | -$45,000 | -8.0% |
| Combined regionals | $245,000 | 74.2% | -$49,500 | -11.8% | $196,000 | 57.4% | -$64,000 | -16.8% |
| Sydney | $655,000 | 100.8% | -$125,000 | -9.6% | $202,000 | 34.5% | -$45,770 | -6.9% |
| Melbourne | $397,000 | 78.6% | -$50,000 | -5.7% | $140,000 | 33.9% | -$42,000 | -8.3% |
| Brisbane | $395,000 | 92.9% | -$60,000 | -6.6% | $155,000 | 38.8% | -$37,000 | -7.4% |
| Adelaide | $351,000 | 96.2% | -$65,000 | -10.2% | $175,000 | 59.7% | -$56,990 | -13.4% |
| Perth | $231,000 | 55.0% | -$55,000 | -10.1% | $100,000 | 33.3% | -$32,500 | -8.1% |
| Canberra | $435,000 | 84.3% | -$89,000 | -9.2% | $150,000 | 35.0% | -$49,200 | -8.3% |
| Hobart | $282,000 | 78.3% | -$50,000 | -7.4% | $198,000 | 59.1% | -$60,000 | -10.3% |
| Darwin | $235,000 | 69.1% | -$55,000 | -9.4% | $85,000 | 31.4% | -$83,000 | -18.6% |
However, the report points out that losses are the true anomalies in the property market.
These typically occur at critical market inflection points—such as purchasing at the peak of a market cycle just before a correction.
As Dr. Nicola Powell, Domain’s Chief of Research and Economics, explains:
"Transactions at these points can be particularly challenging, especially under the current 'higher for longer' cash rate environment.
In such cases, sellers may accept a loss based on their individual circumstances, highlighting the importance of timing and market awareness in property investment."
The broader implications: a continued case for property investment
The findings from Domain’s Profit and Loss Report provide a compelling case for continued engagement with the property market.
As Australia grapples with high property prices, the likelihood of profit-making sales has increased, particularly for houses, which have generally experienced higher rates of price growth compared to units.
This trend underscores the importance of real estate as a key driver of financial stability and wealth creation for Australians.
Dr. Powell emphasizes the need to ensure that property ownership remains affordable and accessible to all Australians, as having an asset that increases in value is crucial for financial security.
For investors, these insights reinforce the value of staying informed and strategically positioned within the market, whether in bustling city centres or increasingly profitable regional areas.
As the property market continues to evolve, it’s clear that real estate remains one of the most reliable avenues for building wealth in Australia.
The resilience and profitability highlighted in Domain’s report should serve as a reminder of the enduring value of property investment, even in times of economic uncertainty.
