‘Make hay while the sun shines’: The wealthy are selling property as quickly as 6 months after buying as values skyrocket

(Jeff Greenberg, Universal Images Group via Getty Images)
  • Australia’s wealthiest property owners have capitalised on Sydney’s hot property market, with recorded profits of up to $6 million on houses bought and sold within as little as 12 months.
  • It comes as Domain data shows that in the past two years, house prices in Sydney’s Eastern Suburbs have risen by 29%.
  • Short hold periods are “a phenomenon of the rapid value increases seen in dwelling values,” Eliza Owens, CoreLogic’s head of research told Business Insider Australia.
  • Visit Business Insider Australia’s homepage for more stories.

The story of Australia’s exploding property sector has largely focused on those seeking to enter a hot market. But beyond those profiting from the sale of a longstanding home, many recent buyers have exploited the market with short holds resulting in profits of up to $6.2 million within a 12 month period.

In response to the price surge that began in January of this year, a raft of major short-hold sales presented big windfalls for some sellers.

In early June, data from CoreLogic showed that Sydney median home values were rising at a rate of $1,000 a day, a factor that pushed the average New South Wales home above the $1 million mark for the first time.

Eliza Owen, head of research at CoreLogic, told Business Insider Australia it would not be surprising to see more people cash in on recent gains across Sydney.

“CoreLogic data suggests that across Sydney, resales through the March quarter for properties with a hold period of less than two years have a median gain of $156,000,” Owen said.

This includes a median gain of over around $160,000 for sales in the City and Inner South of Sydney, and a median gain of over $300,000 across the Eastern Suburbs.

‘Make hay while the sun shines’

Owen said that short hold periods are “a phenomenon of the rapid value increases seen in dwelling values.”

Its data shows that values have already risen 12.5% in the calendar year to date.

Domain data shows that in the past two years, leading to March 2021, house prices in Sydney’s Eastern Suburbs have risen by 29%.

One example is Seven Network commercial director Bruce McWilliam, who realestate.com.au claims owns about $200 million worth of residential and commercial property.

In February, McWilliam sold a property in Bellevue Hill for more than $9 million, quickly followed by the sale in March of a Point Piper waterfront investment property for $33 million, the highest sale of the year at the time. The property was purchased for $10.65 million in 2013.

Haynes Wileman, a real estate agent with Phillips Pantzer Donnelley in Sydney, told Business Insider Australia he has seen several short-hold properties change hands within months in the eastern suburbs with significant margins.

“I sold one in Bronte in December last year for $2.2 million,” he said. “And we just resold it four months later for $2.46 [million].”

“Not as sexy as a million, but as a percentage that’s still something,” he said.

Haynes said that in most cases when owners living in a property move out, they tend to rent it out, but “with things so positive in such a short amount of time,” he’s seen several cases where they’ve instead capitalised on market conditions.

A source who declined to be named in eastern suburbs real estate told Business Insider Australia wealthy clients have seen the exploding market this year as an opportunity to make quick profits on their assets.

They referenced a property on Gilliver Avenue in Vaucluse which settled in June 2020 for $8.8 million. It sold again just under 12 months later for $15 million.

In February, McWilliams also told the Courier in response to questions around recent sales that “sometimes you have to refresh the portfolio.”

“I think that’s a polite way of saying, ‘making hay while the sun shines’,” the source told Business Insider Australia.

“The market conditions are so good at the moment,” he said, but added that many of his clients recognise that holding out hope prices could continue rising at the same pace is a riskier bet than cashing in now.

“All I can say is, we don’t know about then, we know about now,” he said.

Values have shot up by almost 20% in two-year period

Owen also said investors in the south west, outer south west and Blacktown, who historically have lower hold periods than owner occupiers, will have made significant profits as a result of the price surges of the past six months.

CoreLogic data reflects this particularly in the greater Blacktown region, Owen said, where investor ownership in the house segment is estimated to be up to 24% of properties

Of Sydney suburbs with a median hold time of two to four years, a swathe of Sydney suburbs have seen price gains of up to 20% within 12 months leading to May 2021.

In Austral in Sydney’s South West, which had a median hold time of 2.3 years as of March 2021, property values shot up 7.1% in the three months leading to May this year, and 19.4% in the past 12 months.

Similarly, in Leppington, Box Hill, and Riverstone in Blacktown, which all have similarly short hold times, prices have risen in the past 12 months to 19%, 17.2%, and 15.7% respectively.

‘Cash in their gains’

“With bank forecasts that the cash rate could start to rise from as early as 2022, people may be looking to cash in their gains before the market shifts,” Owen said.

Cameron Kusher, director of economic research at realestate.com.au, said in late June prices are unlikely to continue to climb at the same pace.

Kusher named several factors he said would culminate in a slowdown, including fixed mortgage rates, regulation in the form of tightening lending standards, the winding back of government stimulus and weakening demand; and the potential that closed borders into 2022 could lead to oversupply in the market.

He said that right now the housing market was continuing to record high demand and sales volumes, the property market was starting to slow.

“While the market is still booming, some of the heat has already come out of the market,” Kusher said.