Pain and Gain – here’s where property owners made and lost money

Profitable dwelling resales continue to rise according to the latest CoreLogic Pain and Gain report which analyses the performance of property resales across the nation.

Almost nine in ten (87.4 per cent) property resales over the September 2019 quarter sold for more than their previous price, delivering a gross profit of $18.7 billion for resellers across Australia.

Property Trends

The report reveals a slight increase in profitable resales (0.1 per cent) compared to the previous quarter, while gross profits increased by $2.4 billion over the same period (resales totalled $16.3 billion in June 2019).

Overall, Hobart sellers were most likely to experience gains with 98.1 per cent of properties selling for a profit over the three months to September 2019.

A high proportion of resales in regional Victoria (96.6 per cent) and regional Tasmania (96.4 per cent) also delivered positive returns for sellers.

CoreLogic head of residential research Eliza Owen said, “Hobart has experienced particularly large capital gains over the past five years and this has translated into exceptionally strong results for resellers of both houses and apartments during the past quarter.”

The strong housing market in Hobart and regional Tasmania has also helped investor owners, who are more likely to sell at a loss than owner-occupiers, to buck the trend and enjoy greater gains than in these regions.

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“When it comes to generating a profit for the seller, owner-occupied properties have outperformed investment properties in all markets except for Hobart and Regional Tasmania. Over the September 2019 quarter, 98.8 per cent of investment properties resold in Hobart were profitable compared to 98.0 per cent of owner-occupied dwellings,” Eliza Owen said.

Nationally, 88.9 per cent of owner-occupied properties resold for a profit compared to 83.4 per cent of investor-owner properties.

Overall, house resellers were more likely than unit sellers to experience gains. Nine in ten (90 per cent) houses across Australia sold for more than their previous purchase price compared to 80.2 per cent of apartments.

The disparity was greatest in Brisbane and Canberra, where units were 6.8 times and 6.7 times more likely to sell for a loss than houses.

Eliza Owen said, “In recent years, there has been a relatively high level of newly constructed apartments in state capitals, especially across Brisbane and the ACT. This oversupply, which contributes to lower prices and higher vacancies, has impacted returns for unit resellers.”

Sell Sold PropertyDuring the September quarter, regional markets outperformed capital cities, with sellers making a profit from 88.0 per cent of regional resales compared to 87.1 per cent of resales across the state capitals.

There were also $764.8 million in gross losses over the quarter generated from 12.6 per cent of property resales nationally.

Sellers in Darwin experienced the greatest pain with just over half (51.7 per cent) of properties reselling for a gross profit followed by regional Western Australia (56.9 per cent) and Perth (63.6 per cent).

The housing markets in Perth and Darwin have been trending downward over the past half a decade meaning property owners need to hold their dwelling for longer if they want to increase their chances of making a profit.

Across the capital cities, the median hold periods for profitable house sales were highest in Perth (13.1 years) and Darwin (13.5 years) and lowest in Hobart (9.2 years) and Sydney (9.5 years).

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Key findings for September 2019 quarter – national

87.4 per cent of properties across the nation sold for a profit in the September 2019 quarter.

Across the combined capital and regional markets, a higher proportion of houses (90.0 per cent) resold at a profit than units (80.2 per cent).

Hobart leads the market with 98.1 per cent of homes resold turning a gross profit, followed by regional Victoria (96.6 per cent) and regional Tasmania (96.4 per cent).

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Hobart also recorded the highest gains for both houses and apartments with 98.0 per cent of house resales and 98.5 per cent of apartment resales profitable.

Regional Victoria and the ACT delivered the strongest results for house resellers with 96.9 per cent of houses in these areas reselling for a profit.

The greatest gains for apartment resellers were across the rest of Tasmania (96.3 per cent) and the rest of Victoria (94.2 per cent).

The greatest losses for houses were recorded in Regional WA and Darwin, where 41.0 per cent and 39.0 per cent sold at a loss, followed by Perth (32.9 per cent).

For units, the greatest pain was in regional WA and Darwin, where 63.7 per cent and 61.8 per cent of apartment resales were at a loss respectively.

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Nationally, investors were more likely to resell at a loss compared to owner-occupiers.

11.1 per cent of owner-occupied properties in Australia resold at a loss compared to 16.6 per cent of investment properties.

Throughout the combined capitals, 11.1 per cent of owner-occupiers failed to resell their property for a profit compared to 17.2 per cent of investor-owned properties.

The difference was greatest in Canberra, where 5.2 per cent of owner-occupied properties resold for a loss compared to 24.9 per cent of investment properties.

Nationally, profitable resales were held for a median of 9.5 years while loss-making resales had a median hold period of 6.0 years.

Key findings — regional

Across the major coastal markets, Geelong reported the highest proportion of profit making resales over the September 2019 quarter (98.8 per cent).

Resale losses were the greatest in Bunbury (37.5 per cent) and Cairns (23.3 per cent).

In the non-coastal regions, the highest proportion of profit making resales were in Ballarat (98.6 per cent) and Bendigo (96.8 per cent) while the highest proportion of loss making resales were in Queensland’s Toowoomba region (12.7 per cent) and the New England & North West region of New South Wales (11.5 per cent).

The Sydney property market

  • SydneyIn Sydney, 90.2 per cent of dwelling resales were profitable over the September quarter. This was up from 89.1 per cent in the June quarter but down from 94.5 per cent a year ago.
  • Mosman resellers experienced the highest gains with 98.6 per cent of all homes resold at a gross profit. This was followed by Waverley (96.3 per cent) and Hunters Hill (95.5 per cent).
  • The lowest proportion of profit making resales was recorded in Parramatta where 81.5 per cent of all resales turned a profit, followed by Canterbury-Bankstown (81.7 per cent) and Strathfield (83.7 per cent).

The Melbourne property market

  • 93.0 per cent of Melbourne properties resold for a gross profit over the September quarter. This is up from 92.2 per cent in the June quarter but down from 95.2 per cent a year ago.
  • Macedon Ranges recorded the highest proportion of profit making resales with 100 per cent of all homes resold incurring a gross profit, followed by Moorabool (98.9 per cent) and Melton (98.3 per cent).
  • The lowest proportion of profit making resales was in the Melbourne council area (67.1 per cent). Next were Stonnington (79.1 per cent) and Port Phillip (84.5%).

The Brisbane property market

  • Brisbane87.9 per cent of Brisbane resales recorded a gross profit over the September quarter, up from 87.2 per cent over the June quarter. This was down from 90.8 per cent over the same period last year.
  • Only 63.5 per cent of unit resales made a gross profit over the quarter compared to 94.6 per cent of houses.
  • The Scenic Rim experienced the greatest gains, with 93.6 per cent of properties reselling at a gross profit. The next most profitable areas were Moreton Bay (90.8 per cent) and Redland (90.4 per cent).
  • The lowest proportion of profit making resales was recorded across the Lockyer Valley council, with 82.9 per cent of resales turning a gross profit, followed by Brisbane council area (86.1 per cent) and Somerset (87.5 per cent).

Adelaide

  • 89.2 per cent of resales across Adelaide were sold for a gross profit over the September quarter, down from 91.8 per cent over the June quarter.
  • 92.4 per cent of Adelaide house resales sold for a profit and 76.4 per cent of unit resales were profitable.
  • The highest proportion of profit making resales was recorded in the Adelaide Hills (96.6 per cent of dwellings were profitable), followed by Mitcham (94.3 per cent).
  • Adelaide council area had the lowest proportion of profit making resales with 70.2 per cent of dwellings resold at a gross profit.

Perth

  • Perth63.6 per cent of Perth dwelling resales turned a gross profit over the September quarter (up from 63.3 per cent in June). A year ago, 68.8 per cent of homes in Perth resold at a gross profit.
  • 67.1 per cent of houses were resold at a profit compared with 48.0 per cent of units.
  • 81.8 per cent of resales turned a profit in Claremont, followed by Cottesloe (81.3%).
  • The lowest proportion of profit making resales were recorded in Perth council area (32.3 per cent) followed by Belmont (52.8 per cent) and Mandurah (56.7 per cent).

Hobart

  • Hobart had the highest proportion of profitable resales, with 98.1 per cent of all resales over the September quarter recording a gross profit.
  • 98.5 per cent of units turned a gross profit over the quarter compared with 98.0 per cent of houses.
  • Three areas recorded 100 per cent of resales at a gross profit: Brighton, Derwent Valley and Glenorchy. The lowest proportion of profit making resales was in Hobart council, where 95.7 per cent of properties resold at a gross profit.

DarwinDarwin

  • Profit making resales in Darwin tracked at 51.7 per cent over the September quarter (up from 50.4 per cent of resales in June).
  • The unit sector has shown a larger proportion of loss making resales, with 61.8 per cent of resales compared with 39.0 per cent of houses.

Canberra

  • In Canberra, 89.3 per cent of properties sold for more than their original purchase price in the September quarter 2019.
  • 78.9 per cent of resales recorded a gross profit compared with 96.9 per cent of house sales.

Proportion of total resales at a loss/gain, houses vs. units, September 2019 quarter

Houses Units
Region Pain Gain Pain Gain
Sydney 7.9% 92.1% 12.5% 87.5%
Rest of NSW 5.7% 94.3% 7.9% 92.1%
Melbourne 3.4% 96.6% 15.0% 85.0%
Rest of Vic. 3.1% 96.9% 5.8% 94.2%
Brisbane 5.4% 94.6% 36.5% 63.5%
Rest of Qld 14.1% 85.9% 24.8% 75.2%
Adelaide 7.6% 92.4% 23.6% 76.4%
Rest of SA 18.5% 81.5% 20.3% 79.7%
Perth 32.9% 67.1% 52.0% 48.0%
Rest of WA 41.0% 59.0% 63.7% 36.3%
Hobart 2.0% 98.0% 1.5% 98.5%
Rest of Tas. 3.6% 96.4% 3.7% 96.3%
Darwin 39.0% 61.0% 61.8% 38.2%
Rest of NT 24.3% 75.7% 42.9% 57.1%
Australian Capital Territory 3.1% 96.9% 21.1% 78.9%
National 10.0% 90.0% 19.8% 80.2%
Cap city 9.7% 90.3% 20.5% 79.5%
Regional 10.5% 89.5% 18.0% 82.0%

Proportion of total resales at a loss/gain, owner occupied vs. investors, September 2019 quarter

PAIN GAIN
Region Owner Occupied Investor Owner Occupied Investor
Sydney 9.2% 11.1% 90.8% 88.9%
Regional NSW 6.0% 6.6% 94.0% 93.4%
Melbourne 4.5% 11.9% 95.5% 88.1%
Regional Vic 3.4% 3.5% 96.6% 96.5%
Brisbane 7.5% 22.4% 92.5% 77.6%
Regional Qld 14.7% 23.4% 85.3% 76.6%
Adelaide 8.4% 17.8% 91.6% 82.2%
Regional SA 17.8% 24.4% 82.2% 75.6%
Perth 34.3% 45.8% 65.7% 54.2%
Regional WA 41.8% 52.5% 58.2% 47.5%
Hobart 2.0% 1.2% 98.0% 98.8%
Regional Tas 3.9% 2.1% 96.1% 97.9%
Darwin 38.7% 61.0% 61.3% 39.0%
Regional NT 24.6% 40.9% 75.4% 59.1%
Australian Capital Territory 5.2% 24.9% 94.8% 75.1%
National 11.1% 16.6% 88.9% 83.4%
Cap city 11.1% 17.2% 88.9% 82.8%
Regional 11.0% 15.3% 89.0% 84.7%

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Eliza Owen

About

Eliza holds a first class honours degree in economics from the University of Sydney and is a regular on Backchat on FBI Radio, and have been a guest speaker on Triple J’s Hack, 702 ABC Radio, Sky News and at TEDxYouth Sydney. Her property market commentary has appeared in The Guardian Australia, the Australian Financial Review, Pedestrian TV and the Daily Telegraph. Eliza is currently head Of Residential Research Australia for Corelogic.


'Pain and Gain – here’s where property owners made and lost money' have 1 comment

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    January 24, 2020 Alex

    Hi Michael, “Across the capital cities, the median hold periods for profitable house sales were … lowest in Hobart (9.2 years) and Sydney (9.5 years).” Does this mean that various property holding costs, fees and taxes consume most of the capital gain in the first decade even in booming markets such as in Hobert and Sydney?

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