Property resales remained a profitable venture for many Australian homeowners during the September 2019 quarter, with almost nine in 10 resales selling for more than their previous price, according to CoreLogic's latest Pain and Gain report.
The report, which analysed the performance of property resales across Australia, found that gross profits for resellers increased by $2.4bn over the quarter to $18.7bn.
Of all states, Hobart recorded the most substantial gains, with 98.1% of properties selling for a profit. Victoria and Tasmania followed, with 96.6% and 96.4% properties resold for profit.
"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," said Eliza Owen, head of residential research at CoreLogic.
The robust market conditions in Hobart and regional Tasmania were favourable to investors. In fact, 98.8% of investment properties resold in Hobart were profitable compared to 98% of owner-occupied dwellings.
"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," Owen said.
Across Australia, 88.9% of owner-occupied properties resold for a profit compared to 83.4% of investor-owned properties.
Regional Tasmania was one proof of regional markets' appeal. During the quarter, regional sellers made a profit from 88% of resales, higher than the 87.1% in state capitals.
Sellers in two state capitals, Perth and Darwin, felt the greatest pain, according to the report. In Perth, only 63.6% of properties were sold for a gross profit, while in Darwin, just over half turned positive. This means that sellers in these two state capitals need to hold their dwelling for longer to increase their chances of making a profit.
The median hold periods for profitable house sales are 13.5 years in Darwin and 13.1 years in Perth. The lowest hold periods were in Hobart at 9.2 years and Sydney at 9.5 years.
In terms of dwelling types, houses were more likely to record gains than units. Nine in 10 detached houses sold for more than their previous purchase price compared to just eight in 10 units.
In some states, however, the gap between the gains of houses and units were more noticeable. For instance, units in Brisbane and Canberra were more 6.8 times more likely to sell for a loss than houses. This could be due to the oversupply of units that made acquiring units cheaper for resellers.
"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," Owen said.
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