Led by gains in capital cities, particularly in Sydney, the vast majority of Australian residential property sales in the March quarter were profitable for the sellers.
According to the latest quarterly CoreLogic-RP Data pain and gain report 90.9% of residential property sales received a higher price than what they were initially purchased for. Not only did 90.9% receive higher prices than what they were previously bought for, but just over 30% saw their prices double from the initial purchase price.
From the report:
“While 9.1% of resales were transacted at a loss, the vast majority (90.9%) of properties resold over the quarter did so at a profit. In fact, 30.7% of homes resold for more than double their previous purchase price. Across those homes which sold at a profit, the total value of this profit was recorded at $13.8 billion with the average gross profit recorded at $230,633”.
In what will surprise few, the report notes that capital city housing markets recorded a significantly lower proportion of loss-making sales compared to those seen in regional areas. Only 6.2% of residential properties sold in capital cities were done so at a price lower than their buying price. This compares to 14.6% of all sales that occurred in regional areas.
Houses, at 7.7%, also recorded a significantly lower level of loss-making sales compared to units at 12.5%. Breaking this down further, 5.2% of capital city house transactions were done so at a loss compared to 11.9% in rural areas. This pattern was also seen for units with 8.1% of sales in urban areas done so at a loss compared to 23.1% for units.
The table shown below shows how individual urban and rural areas performed during the quarter. Reflective of Sydney’s hot property market, and the potential increase in investor activity, loss-making property sales in Sydney were minuscule, particularly for units.
The table below, shown in years, also reveals those properties that sold at a loss were generally held for a shorter period of time than those which saw prices increase. Purchases made during the peak of the mining boom, and introduction of increased first home-owner grants during the global financial crisis, tend to correspond with the hold period associated with loss-making sales.
In what will give further information on recent price developments in Australia’s residential property market, the ABS will release its March quarter capital city house price index at 11.30am on Tuesday.