Tight prices, historically low mortgage rates and growth in home values have created impressive returns for resale sellers, with the highest cases of profitability in the regional and tree exchange markets.
Based on 106,000 resales, 91.5% posted a profit-making nominal gain from the previous purchase price in the June quarter, the highest level of profitability in a decade, according to CoreLogicThe latest Pain & Gain report.
The median gross profit from resale was $ 260,000, while the median gross loss was $ 43,000. The average waiting period was 8.8 years.
For-profit residential sales have risen for four consecutive quarters, with June increasing 9% compared to the March quarter, according to Eliza Owen, head of research at CoreLogic.
Owen said this “extraordinary payback” also allowed owners to resell at an average return of $ 123,000 after just two years.
“For those who got paid after more than 30 years of owning a property, the average return was $ 712,000,” Owen said. “These high levels of profitability may begin to encourage vendor engagement and reduce typical waiting periods, especially as major cities navigate a path out of the 2021 lockdowns.”
Profitability continues to skyrocket in regional and tree exchange markets. For example, the Ballarat SA4 region alone had a 99.7% rate of return, which could easily be extended to other Victorian markets where 98.7% of resales exceeded the purchase price.
However, not all locations posted high profitability due to border closures and weak rental markets in the city center. Losing resales were recorded in Perth at 63.5%, Darwin at 39.3% and Melbourne at 34.8%.
Regardless, Owen said these underperforming markets still saw “big improvement” in the June quarter.
“The loss-making resale rate decreased 4.6% in Perth in the June quarter and 4.7% in Darwin,” Owen said.