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Regional areas and lifestyle markets dominated the list of the most profitable housing markets in Australia, a new report has revealed.
CoreLogic’s latest Pain and Gain report for the December quarter analysed the proportion of dwelling resales that made a nominal gain relative to the previous purchase price.
Of the 30 housing markets with the highest incidence of profit-making sales, 20 are located within regional Australia, including non-coastal regional centres and lifestyle markets, CoreLogic’s latest Property Pulse noted.
“The results partly reinforce some of the trend for established, regional markets that offer space and affordable houses, as opposed to the waning unit demand in major cities, through the pandemic,” according to CoreLogic head of research Eliza Owen.
The most profitable areas saw 100 per cent of all resales making a nominal gain, including Bellingen in regional NSW, Burnie in regional Tasmania, and Mildura and Warrnambool in regional Victoria.
Ms Owen said that regional lifestyle markets such as Bellingen typically consist of over 75 per cent of owner-occupier properties, which “have a higher incidence of profit-making sales, and generally have a higher median profit than investor profits”.
Further, these markets have shown relatively high incidence of profitability over the past decade.
Bellingen’s median profit currently sits at $302,500 — the second-highest median profit recorded across all 30 housing markets on the list, following Noosa ($339,000).
In comparison, Burnie saw a median profit of $98,600, while Mildura and Warrnambool had $113,750 and $130,500, respectively.
Bellingen also recorded a median hold period of over 14 years, higher than the national average of 8.9 years.
Other housing markets that emerged with high incidence of profit-making sales were Ballarat (99.5 per cent), South Gippsland (99.5 per cent) and Campaspe (99.4 per cent) in regional Victoria, as well as Devonport (99.3 per cent) and West Tamar (99.1 per cent) in regional Tasmania.
In Queensland, Noosa had the highest rate of profit-making sales at 98.1 per cent, while South Australia had Tea Tree Gully with 98 per cent and Western Australia had Augusta-Margaret River with 90.4 per cent.
Based on 98,000 sales, CoreLogic’s Pain and Gain report recorded 89.9 per cent of sales seeing a nominal gain through the December quarter at a national level, up from the recent low of 87.4 per cent in the three months to June.
In other words, nearly nine in every 10 sellers are profiting from property sales across Australia.
The report noted that the increase in the rate of profit-making sales reflected the turn in housing market performance as lockdowns started to ease and national housing values rose 2.3 per cent.
Looking ahead, Ms Owen said that the surge in dwelling values witnessed across the property market through the first few months of 2021 would most likely drive a continued rise in the proportion of profit-making sales nationally.
However, several other factors may also come into play, particularly as Australia faces the impact of natural calamities as well as the ongoing economic recovery post-pandemic.
“Recent weeks of flooding, if not the past 12 months of extraordinary events, have shown that housing market activity, and ownership and transaction costs, can quickly change the outlook for profitability in real estate in certain markets,” Ms Owen concluded.
For the most profitable capital city LGAs, click here.
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