Australian Property Market Sees Surge in Profits and Sales
The Australian property market has witnessed a significant upturn, with a marked increase in the rate of profit-making sales and overall transaction numbers in the last quarter of 2023, according to CoreLogic’s recent Pain & Gain report. The research analyzed around 90,000 resales during this period, uncovering that an impressive 94% of transactions ended in nominal gains, with the median gross profit escalating to $310,000, showcasing robust growth in all key metrics compared to previous quarters.
Eliza Owen, CoreLogic’s Head of Research, highlighted the resilience and growth of Australia’s housing market, stating, “The improvement in the key metrics of this report really highlight the improving profitability in the housing market since the recovery trend began in early 2023.” Owen also noted a decline in loss-making sales to a mere 6%, emphasizing the broad-based increase in profitability across the Australian housing market as a stabilizing factor during times of rising mortgage costs for some households.
The report also sheds light on regional market dynamics, with regional Australia outperforming capital cities in terms of profitability. A notable 95.5% of resales in regional areas reported nominal gains compared to 93.2% in the combined capitals. “Due to the lingering value add of the COVID-boom, regional markets are looking more profitable than capital cities,” Owen remarked, attributing this trend to sustained demand, limited housing supply, and a more favorable cost of living environment in these areas.
Additionally, Adelaide emerged as the most profitable capital city market for the fifth consecutive quarter, with more than 98% of resales yielding nominal gains. The report also highlights the performance differences between houses and units, with houses showing a higher rate of profit-making sales at 97% compared to 88.2% for units. Owen pointed out, however, that the gap between the profitability of houses and units has narrowed, indicating a potential shift in market preferences towards affordability and the increasing appeal of units.
CoreLogic’s analysis also touched upon the trends in hold periods, revealing that the median hold period for resales across Australia was 9 years, with national home values seeing a 63% increase since the median initial purchase date in November 2014. The findings suggest a correlation between short hold periods and higher instances of loss-making sales, particularly in the greater capital city and regional house markets.
This resurgence in the Australian property market not only highlights the sector’s vitality but also underscores the strategic opportunities and challenges facing investors and homeowners alike in navigating the evolving landscape of real estate profitability.
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