Australian property resales reached their highest rate of profitability, since July 2010, in the first quarter of the year, according to CoreLogic's Pain & Gain, March Quarter 2024 report.
Mortgage borrowers and outright owners made a median gross profit of $265,000.
That was actually down from a revised $268,000 made by those vendors who sold in the final quarter of 2023 due to a higher portion of unit resales through the start of the year than in the previous quarter.
The report analysed approximately 85,000 resales over the period and showed 94.3 per cent of transactions recorded a nominal gain.
CoreLogic's head of research Eliza Owen said despite the slightly smaller capital gain, more property owners are making a profit on sale.
"Despite the slight drop off in the median nominal gain, the rate of sellers making a profit has improved over the year and is the highest in Australian dwelling sales since July 2010," she said.
"This increase in the profitability rate across the Australian housing market helps to shore up financial stability for many property owners at a time when higher mortgage costs are starting to take their toll on household budgets."
CoreLogic estimates the combined value of nominal gains from resale was $28.6 billion in the March quarter, down from $30.6 billion in the December quarter of 2023.
Nominal losses from resales were $278 million in the quarter, down from $302 million in the previous quarter.
AMP's chief economist Shane Oliver says the Australian property market remains strong.
"It's surprised me with its strength."
"The main factor I think has just been the sheer shortage of property relative to the massive population growth that we've seen over the last 18 months."
Mixed picture across country
It's a mixed picture though across the nation.
Outside of the Northern Territory, Melbourne had the highest rate of loss-making sales of the capital city markets, at 9.2 per cent, up from 8.9 per cent in the previous quarter.
"Melbourne has been relatively soft," Dr Oliver said.
"If you take the 12 months to May, Sydney is up 7.4 per cent, Melbourne is up 1.8 per cent — that's for dwellings.
"So Sydney and Melbourne, they're sort of OK but they're a little bit more subdued.
"And I think that reflects the fact affordability is so much worse in those two cities.
"Melbourne of course is the weakest and I suspect there's a degree of distressed selling in Melbourne."
Adelaide and Brisbane were tied for the most profitable cities, with a loss-making sales rate of just 1.6 per cent of resales.
Perth had shown a remarkable turnaround in the past few years as loss-making sales declined to 6.4 per cent from the 43.8 per cent recorded in the June quarter of 2020.
"Conditions are heavily in favour of Perth sellers with an additional improvement in profitability expected in the June quarter," Ms Owen said.
"In the December quarter of last year, Perth managed to improve its position from the second least-profitable capital city for the first time since 2015."
Across Australia, houses continued to deliver higher rates of profit-making sales compared to units.
The Pain & Gain report shows 97.1 per cent of house resales made a nominal gain in the March quarter, compared to 89.0 per cent of units.
Three-year resales hit high
Of note too, is the increased number of sales after holding a property for three years.
"This data suggests the sticker shock from higher mortgage rates may have had some influence on decisions to sell more property than otherwise would have transacted after a short hold period," the CoreLogic report noted.
That's a not-so-subtle way of saying higher interest rates have pushed a number of highly leveraged borrowers into a forced sale.
"However, it is worth noting that the peak of the short-term resales series is not too far from the historic decade averages," the report noted.
"In August 2023, the portion of properties sold after two years peaked at 8.4 per cent of resales, up from a decade average of 6.7 per cent.
"Similarly, three-year held resales in the year to March have hit a high of 15.8 per cent, but this is not too far from a decade average of 12.7 per cent."
A place to call home
The median hold period of resales across Australia was 8.8 years through the March quarter, down from 9.0 years in the December quarter of 2023, and 8.9 years in the March quarter of 2023.
Put another way, Australian home owners are choosing to stay put for roughly 8 to 9 years.
"Time in the market rather than timing the market is critical to maximising returns for most resales," Ms Owen said.
Generally, the longer a vendor holds a property the higher the returns with vendors selling after 30 or more years attracting the largest median gain of $780,000."
That also happens to be how long Dr Oliver has held onto his home, but he has no plans to sell.
"Prior to that we had a home for 3 years, and then we traded up, so to speak," he said.
"That is the way people often go.
"Fortunately, it's not a lot shorter so there's not a lot of flipping going on in the Australian property market — it's perhaps too expensive to do that anyway.
"But ideally you'd probably want to have a situation where people are able to get into the home they want and stay in it for many years," he said.
