Property resales in the September quarter last year have accounted for an impressive $14 billion in profits, new data is showing, with Sydney and Melbourne unsurprisingly doing most of the heavy lifting.
During the September 2018 quarter, the sheer majority of Australian property resold for a profit at 88.9 per cent, accounting for $14.06 billion in profit, according to the latest edition of the CoreLogic Pain & Gain report.
Of this profit, Sydney and Melbourne resale profits contributed the most, accounting for 31 per cent and 24.7 per cent, respectively.
According to Cameron Kusher, head of research at CoreLogic, this is due to the higher costs associated with property in these capital cities, as well as strong growth prior to the recent downturn.
The profitability of Sydney and Melbourne is even having a bleed-through effect to nearby regional areas, which Mr Kusher said some are recording fewer resales at a loss than capital cities.
Following these two capital cities, Brisbane contributed 8.4 per cent, Perth contributed 5.9 per cent, Adelaide contributed 3.2 per cent, Hobart and Canberra both contributed 0.9 of a percentage point each and Darwin contributed 0.2 of a percentage point.
Looking broadly at the data, capital city markets are recording higher resales at a profit when compared to regional markets, but Mr Kusher pointed out that the number of resales at a loss were on the rise in capital cities compared to regional areas.
Meanwhile, 11.1 per cent of resales resulted in a loss nationally, resulting in $488.1 million.
Six regional areas in particular saw resale losses at least 40 per cent over the quarter, which included the southern outback of WA at 42.2 per cent, Darwin at 44.8 per cent, the Mackay-Isaac-Whitsunday region in Queensland at 45.9 per cent, Townsville at 47.3 per cent, Central Queensland at 49.4 per cent, and the northern outback of WA at 68.1 per cent.
“It’s important to note though, that although in many of these regions the share of losses is now lower than at the peak, when you consider the material decline in values across these regions, these instances of loss remain elevated,” Mr Kusher said.
“We expect the proportion of loss-making resales to climb further over the coming quarters as housing market conditions continue to slow.”
Investors were also found to be reselling property at a loss more so than owner-occupiers, at 13.8 per cent to 10.1 per cent.
Hobart was the only capital city where investors saw less losses than owner-occupiers, with 100 per cent of all investors selling at a profit.
Houses are reselling at profit more successfully than units, with 90.8 per cent resales being profitable, as opposed to 83.6 per cent.