Australian home sellers saw significant gains in the September 2024 quarter, achieving a record median profit of $295,000 on resales, according to CoreLogic’s Pain & Gain report.
Of the approximately 95,000 resales completed in the September 2024 quarter, 95.0% of them made a profit, up from 94.5% in the June 2024 quarter.
Factors driving increased profits
Low housing supply
The low supply of homes for sale was a major driver of the 2024 market. Listings in the 12 months to December 2024 were down 0.5% nationally, according to SQM Research. Throughout most of the year, listings remained below long-term averages (see graph).
Adding to this was a decline in new builds. Between June 2023 and June 2024, building commencements dropped 3.6%, according to Australian Bureau of Statistics (ABS) data. This followed a post-pandemic construction surge, with private houses under construction falling 15.2% between June 2022 and June 2024. Rising construction costs, up 6.7% annually since 2019 according to the ABS, further constrained supply.
High demand
Population growth, particularly driven by overseas migration, significantly boosted demand for housing. Between the June 2023 and 2024 quarters, the country’s population grew 2.1%, or 552,000 people, according to the ABS.
High capital growth
Low supply and high demand put upward pressure on home prices. According to CoreLogic, home values grew 4.9% in 2024 with double-digit figures for Perth, Adelaide and Brisbane.
Profits by location
Like capital growth, profit-making was highest in Brisbane (99.4% of resales), Adelaide (99.0%) and Perth (96.9%). All capitals except Melbourne saw improvements in the number of sales that made a profit.
As shown in the table, the number of loss-making sales declined in all capitals except Melbourne. Median profit in Sydney was $370,000, up from $353,000 the previous quarter. This was the highest of all the capitals but closely followed by Adelaide at a $358,000 median profit.
Houses vs. units
Houses delivered far better results in the September 2024 quarter with only 2.9% of resales making a loss, compared to 9.4% of units. This indicates that houses were roughly three times more likely to turn a profit on resale than units. Units accounted for 33.5% of resales but made up 62.1% of loss-making sales.
Additionally, the profit made on house resales was far higher at $345,000, compared with $200,000 for units.
This is not a new trend. Since CoreLogic began tracking loss-making sales in the mid-1990s, units have always had a higher chance of making a loss. And while the gap in the amount of profit made has fluctuated, it has steadily widened since the early 2000s.
Impact of holding periods
Profit-making sales had a slightly longer median holding period than loss-making sales — 9.1 years compared to 8.0 years. The median holding period also increased between the June and September quarters (8.8 years to 9.0 years), suggesting sellers are leaning towards keeping properties for longer.
But, the impact of holding periods varies by location. For example, the median hold period of profit-making sales of houses in Sydney was 10.3 years, compared to almost two years less for Brisbane (8.4 years).
Sales volume shows a noticeable peak between the two and four-year mark. However, CoreLogic noted that this could be an outlier since that hold period would line up with the surge of purchases seen when interest rates were low in 2020 and 2021.
These homeowners likely experienced a sharp increase in mortgage repayments as interest rates rose over the last two years, prompting some to sell. Additionally, those with fixed-rate mortgages from that period may have faced even greater changes. Three years later, when those terms expired, their monthly mortgage repayments would have significantly increased.