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Profit on property soars despite market volatility

By Juliet Helmke
21 September 2023 | 13 minute read
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Though property prices have fluctuated over recent months, a new report shows that Aussie home owners are increasingly making whopping profits on sales.

Domain’s inaugural Tenure and Profit report revealed that 97.8 per cent of Australian houses are currently reselling at a profit, as are 91.7 per cent of units.

This isn’t a drastic change from the norm, as Australian property has historically been a relatively stable investment and wealth-builder with profit making typically hovering around 90 per cent. But the recent figures represent a high level of profit for homes in particular, not last seen since roughly 2005, and significant in light of the volatility in prices over the past year.


The capitals have seen a particularly strong rate of profit in 2023, with the smaller cities of Canberra, Adelaide and Hobart recording the highest proportion of profitable resales.

In Adelaide, almost every sale could be considered profitable, with more than 99 per cent of houses and units fetching more for buyers than they paid. Home sales in Canberra, Hobart, regional Victoria and regional Tasmania also recorded sale price increases in more than 99 per cent of cases.

In Sydney, profitable sales dropped back by 1.7 per cent to 95.1 per cent of sales in 2023. However, it’s also the city where house sellers report the greatest median profit, with vendors making an average of $410,000 for parting with their properties. Vendors in Canberra came a close second, making $409,550, while Melbourne owners took in roughly $327,000 on their house sale.

For units, Hobart saw the strongest return on resales at $220,000, followed by regional NSW at $192,500, then regional Victoria at $175,000.

Dr Nicola Powell, Domain’s chief of research and economics, said that the firm expects to see the general trend of high profitability continue as the housing market moves further along in its recovery. However, she noted, on a more granular level some markets remain in question due to Australians’ tight finances.

“In certain localised areas, the landscape may appear different, as some motivated sellers might be more inclined to accept a loss against the backdrop of rising debt costs,” she said.

“In saying that, as prices continue to climb, the likelihood of this diminishes. The profitability is anticipated to remain strong, aligning with the ongoing price improvements, just in time for the spring selling season,” Dr Powell added.

And while this year’s spring season is looking to be particularly robust, Domain’s research on tenure revealed that changing economic conditions for both buyers and sellers over the long term has served to slow the rate of turnover year-over-year.

Domain’s economists found that the trend towards longer tenure has been consistently increasing over the past two decades, with the most consistent tenure increases seen for houses in Sydney and Perth, and for units in Sydney and Melbourne.

Currently, the median tenure for a house is nine years and eight years for a unit, though some areas are held for significantly longer, with suburbs like Clarinda in Melbourne’s south-east logging an average tenure of 24.4 years.

And while one indication of long tenure could be that Australians are finding increasingly better matches for their lifestyle, getting their “dream home” on the first go, there are far more reasons to suggest that negative movements in the country’s housing equation are causing the stalling of sales.

One of the main deterrents to selling is seen to be rising transactional costs, such as stamp duty, which has become substantially more expensive as house prices have grown.

High property prices may also have dampened interest in moving, with home owners staying in properties that do not suit their needs simply because it’s what they can afford. And a lack of housing diversity could also be encouraging older Australians to stay in larger homes when smaller dwellings would suit them better, simply because right-sized housing is not available in the communities where they have historically lived.

Domain’s researchers used Sydney’s lengthening tenure as a snapshot of how housing affordability is having perhaps the greatest impact on tenure, therefore serving to further slow the rate of turnover – the city’s average length of stay has grown from six years in 2013 to 10 years in 2023.

Due to rising housing costs, “household budgets are significantly stretched and highly leveraged,” the firm said.

“Sydneys increased tenure highlights housing affordability challenges and transactional costs, all of which discourage people from moving to homes that better suit their needs. Crucially, reduced housing mobility has impacts on workforce mobility and productivity,” it noted.


Juliet Helmke

Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.

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