Half-million-dollar resale gains propel national profits to record levels

According to Cotality’s latest Pain and Gain report, Brisbane recorded the highest share of profitable resales of any capital city at 99.8 per cent with a median gain of $525,190.

Adelaide followed closely, with 99.3 per cent of resales delivering a profit and a median gain of $477,000.

Similarly, Perth recorded strong results, with 98.9 per cent of resales generating a gain, and a median profit of $475,000.

Nationally, 96 per cent of residential property resales delivered a nominal profit over the quarter, up slightly from 95.9 per cent in December, and the strongest result since 2005.

Cotality’s head of research, Gerard Burg, said increased demand in the mid-tier capitals had helped drive rapid value growth in the past five years, which was now flowing through to resale profits.

He said Brisbane, Adelaide, and Perth had provided a comparably affordable alternative to major markets, and benefited from strong population growth, tight housing supply and sustained buyer demand.

“Many owners who bought before the recent upswing, during a period of affordability and low interest rates, are now selling into a market where values have risen substantially, translating into some very significant resale gains,” Burg said.

When it came to losses, the median remained unchanged at $45,000, while the loss-making resales rate was at 4 per cent.

In addition to the smaller capitals, coastal lifestyle markets also proved to be highly profitable, topping the list of the strongest-performing regions.

Noosa, on the Sunshine Coast, in Queensland, recorded the highest median resale gain at $729,750, benefiting from strong long-term demand and limited housing supply.

Five Western Australian local government areas were among the nation's top 10 regions for resale profits, including Melville, Joondalup, Nedlands, East Fremantle, and Chittering.

According to Burg, many of the strongest-performing markets had experienced consistent demand over several years.

“The regions recording the largest resale gains today are generally the same markets that experienced some of the strongest housing value growth through the pandemic and post-pandemic period.”

“Places such as Noosa, a number of Western Australian markets and the Byron Shire in Northern NSW have seen demand consistently outpace supply, and those conditions have translated into substantial wealth gains for home owners.”

Despite resale profitability remaining strong, Burg said the pace of growth recorded over recent years following the pandemic was unlikely to be repeated across all markets consistent across all markets.

He said the recent resale figures were a reflection of strong housing conditions across most capitals over the last five years, rather than a forecast of where the market was headed next.

His comments came after Cotality data showed no growth in May, with Sydney and Melbourne seeing declines while other markets continue to record growth.

“Declining values will erode profitability in the coming months, but future performance will increasingly depend on local market conditions, property type and when a property was purchased,” he said.