CoreLogic analysed approximately 86,000 dwelling resales in Q3 2023.
The incidence of profit-making sales nationally increased to 93.5%, higher than the decade average of 90.8%, and the highest rate of profitability since the three months to July 2022.
The median gains from resale were $298,000 in the quarter, and the total nominal profit from resales were $27.4 billion.
The median losses from resale were -$40,000, and the total nominal losses were $313 million.
Among the capital cities Darwin had the highest portion of loss-making resales at 30.3%, followed by Perth at 10.0%.
Adelaide was the most profitable market of all the regions and capital cities, with just 1.5% of resales making a loss.
Owner occupiers continued to see a smaller rate of loss-making than investors, at 3.2% compared to 10.0% of investors.
The median hold period of resales across Australia was 8.8 years, up slightly from 8.7 years in the June quarter.
However 2023 saw an increased number of short term resales where properties were held for less than 3 years.
Who's winning and who's losing when they sell their properties?
Well...profitability from resales continued to rise amid a national recovery in home values, however short-term loss-making resales also increased, according to CoreLogic's Pain & Gain report for the September quarter.
Approximately 86,000 resales were observed by CoreLogic through Q3 2023, with 93.5% recording a nominal gain, and a median gross profit of $298,000.
This was up from Q2's revised 92.9% of profitable sales at a median gross gain of $290,000.
Total nominal profits from resales in the September quarter were estimated to be $27.4 billion, almost $6 billion higher than a low of $21.6 billion in the three months to February this year, which coincides with the trough in national home values.
While overall profitability increased, loss-making short-term resales (properties held for three years or less) rose to 6.6%, up from 3.6% just 12 months ago.
The chart below shows the rolling rate of loss-making sales across the capital cities versus regional areas of Australia.
As with capital growth trends, the change in the rate of profit-making sales has generally been more extreme in capital city markets through the past few cycles.
The capital city market saw a peak-to-trough decline in home values of -8.1% from mid-2022 to the start of this year, compared to a -5.8% drop in the regional market.
Since bottoming out, values recovered faster in the capital cities to the end of September (up 8.0%) than in the regions (up 2.9%).
This has led to a faster fall in the rate of loss-making resales across the capital city market in the past few quarters, though it is still higher than the rate in regional Australia. The combined capital cities loss-making sales rate fell 90 basis points in the quarter to 7.2%.
In the combined regional market, the rate of loss-making sales fell 30 basis points in the quarter, to 5.1%.
Every capital city-dwelling market except ACT saw a decline in the rate of loss-making sales.
Although the ACT saw a 50-basis point rise in the rate of loss-making sales, the rate itself was almost half the combined capital city rate, at 2.6%.
Adelaide proved to be the most profitable city for the fifth consecutive quarter, with only 1.5% of resales across the city making a nominal loss, which coincides with an extraordinary stretch of capital growth across the market.
Perth retained the second-highest rate of loss-making sales among the capital city markets behind Darwin, at 10.0% and 30.3% respectively.
However, a strong capital growth trend has supported a reduction in the rate of loss-making sales in Perth from 42.1% at the onset of the pandemic.
Perth's rate of loss-making sales is now far more comparable to that of east-coast capitals, where Sydney and Melbourne had loss-making resale rates of around 9%.
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Houses continued to show a much higher rate of profitability than units in the September quarter.
Of the house resales analysed, 96.8% made a nominal gain, up 23 basis points from the previous quarter.
Of unit resales, 87.4% made a nominal gain, but the rate of profitability had a faster increase of 170 basis points.
In fact, the rate of profitability in unit resales has improved vastly since a recent low of 84.7% in the March quarter, while house resales have maintained a rate of profitability above 96% since the December 2021 quarter.
The reduction in the rate of loss-making sales in the unit segment has seen the gap close between the rate of profitability in houses and units.
In the three months to February, units were 4.3 times more likely to see a loss from resale than houses, whereas this reduced to 3.9 times in the September quarter.
2023 was marked by an increase in the rate of short term property resales.
In the year to September, 15.1% of resold properties were held for just 3 years or less across the country, which is above the decade average of 12.5%.
The rise in short term resales has occurred amid the fastest rate hiking cycle on record, where the RBA estimates most mortgagors have seen an increase in scheduled payments of between 30% and 50% since May 2022.
While property is typically thought of as a long-term investment, the rise in short term reselling may still have been fairly profitable for many vendors.
In the year to September, the highest concentration of short term resales was in regional Tasmania at 22.4% of resales over the year.
Despite some weakness in the regional Tasmanian dwelling market since the start of rate rises, values are still 40% higher over the three years to September.
One notable trend about the short term resale phenomenon is that it has been far more concentrated in regional Australia than in capital cities.
The portion of resales held for three years or less was 19.3% across the combined regional market over the year to September, as opposed to 12.7% in the capital cities.
The RBA is forecasting unemployment to rise to 4.2% by the end of next year, up from 3.9% at the end of this year.
This will test serviceability and may lead to an increase in motivated selling for mortgagors with high debt levels and low savings buffers.
However, this is ultimately a small share of mortgagors, so the portion of short-term resales is not expected to grow substantially from where it is now.
Ongoing increases in home values nationally should contain the rate of loss-making short-term resales, though capital growth conditions were looking weaker across Sydney and Melbourne to the end of this year.