🏡 Record Profits for Australian Property Sellers in Q2 2024 – A Golden Opportunity for Investors

CoreLogic’s latest Pain & Gain report reveals an exciting landscape for property investors, with Australian resales delivering record-breaking profits. In the June quarter, the median resale profit soared to a historic high of $285,000, showcasing the resilience of the Australian property market and its ability to generate strong returns for investors. An impressive 94.5% of all property resales resulted in a profit, marking one of the highest profit rates since June 2010.

Key Insights for Investors:

$31.8 Billion in Total Resale Profits: The total nominal gains from resales reached $31.8 billion, up by 7.7% from the previous quarter, highlighting a continued upward trend in property profitability.

Houses Outperform Units: Nationally, houses delivered a 97.2% profit-making rate, outperforming units, which saw an 89.4% profit rate. The median resale profit for houses was nearly double that of units, with houses generating $340,000 in gains compared to $185,000 for units.

Brisbane Leads the Charge: Brisbane emerged as Australia’s most profitable market, with 99.1% of all property sales generating a profit. This was followed closely by Adelaide (98.7%) and Perth (95.4%), reflecting strong capital growth in these cities over recent years.

Regional Markets Shine: Regional Australia continued to outperform the capital cities, with a profit-making sales rate of 95.7%, compared to 93.8% in the capitals. This reinforces the ongoing appeal of regional properties, especially in lifestyle and resource-based markets.

What This Means for Investors:

This period of high profitability reflects several factors favorable to property owners, including stable conditions for mortgage serviceability and rising national housing values, which have been setting fresh records since November 2023. As housing values continue to grow, investor confidence remains strong, with many sellers empowered to time their resales for maximum gain.

Looking ahead, while the broader market faces challenges like higher interest rates, elevated cost of living, and affordability constraints, the fundamentals for property investment remain robust. CoreLogic’s Head of Research, Eliza Owen, notes that demand for units may increase in the coming months, particularly as buyers shift their focus from the more expensive detached house sector.

Opportunities for Regional Investors:

Investors eyeing regional markets should take note of the significant capital growth outside the major cities. While some regions, such as WA’s Outback North, are still recovering from value declines seen earlier in the decade, overall, regional markets are offering promising returns. For example, lifestyle regions like Ballarat, Victoria, and resource-rich areas continue to see demand, contributing to lower hold periods and strong resale profitability.

Hold Period Trends and Long-Term Gains:

The median hold period for resales remained steady at 8.8 years, aligning with a period of robust national growth, where home values have increased by 56% since 2015. Properties held for longer periods tend to generate higher profits, and while houses typically see longer hold periods (8.9 years) than units, the resale profitability for both segments has reached record highs.

What’s Next for the Property Market?

While interest rates are expected to remain high for the foreseeable future, investor sentiment remains optimistic, with the expectation of continued profitability in the housing market. As the spring selling season approaches, the depth of buyer demand may be tested, but the resilience of the market and the potential for further gains make this an opportune time for investors to explore new opportunities.

The Bottom Line:

With the property market delivering record profits and strong performance across both capital cities and regional areas, now is an excellent time for investors to consider their next move. Whether you're looking to capitalize on the profitability of houses or explore opportunities in the growing unit market, staying informed and ready to act on market trends is key to maximizing returns in this dynamic environment.