Brisbane takes the profitability crown

According to Domain’s latest Profit and Loss Report, Brisbane remained the strongest market in the country when it came to profitability, leading the other major capitals.

With 99.5 per cent of house and unit resales achieving a profit, the river city secured its place as top performer, with results supported by recent price growth.

Additionally, Brisbane reached new highs in median gains, with houses selling for $629,056 above their purchase price, while unit resales saw $385,000.

Domain chief resident economist Nicola Powell said that Brisbane had emerged as a standout performer on a national scale.

“You’ve got pretty much everybody walking away generating a profit compared to what they originally purchased their home for,” Powell told REB.

“Brisbane combines near universal profitability with record equity creation.”

Powell said that with the strength of the city’s price growth in recent years, it would take a significant drop in values before vendors’ resale prospects were impacted.

“If you had purchased 12 months ago, even with a slight dip at the moment and softer conditions, you’re probably still going to be walking away with some kind of profit,” she said.

Melbourne

While Brisbane held strong according to the data, Melbourne and Sydney were less fortunate, with the two markets losing traction.

The data showed Melbourne was one of the worst performing capitals, with the highest share of properties selling for a loss.

In Melbourne, 5.7 per cent of houses sold below their purchase price, for an average loss of $68,500, with the city’s unit market faring even worse.

Powell said that with one-in-four units selling for a loss of $46,000 in the Victorian capital, a large portion of the losses came from investors exiting the underperforming market.

She said that the weak performance of Melbourne’s unit market was driven by the combination of poor capital growth and high levels of supply.

“I would say a lot of that is reflecting investors want to get out of Melbourne’s housing market with its weak capital growth.”

“There are some suburbs in Melbourne that have extreme levels of high-density properties of a similar type, and I would suspect that it’s that type of property really driving that loss.”

Sydney

Despite recording the largest resale gains in the nation, with the median house seller making a profit of $739,500, Sydney’s share of resale losses grew over the previous six months.

Conversely, it also suffered from some of the biggest losses, with houses that failed to sell for a profit coming in $170,000 below the purchase price.

Powell said that Sydney’s property market was the most susceptible to any changes to economic conditions, due to its depth of equity.

“Sydney is starting to see early signs of the change in that profitability cycle, and I suspect that trend is going to continue,” she said.

“That vulnerability is there for Sydney, and we see that in terms of its responsiveness to interest rates. Whether they go up or down, the market responds quite quickly.”

Powell said that despite the softening conditions, the majority of home owners would likely still achieve a positive result at sale.

Perth

The data found that Perth managed to outperform the national average for house profitability, with 99.6 per cent selling above their purchase price.

In addition to the highest profitability rate in the country, Perth also benefited from the third highest median gain of $610,000.

She said that with similar market drivers to Brisbane, the Western Australian capital’s high rate of profit returns were driven by years of value growth and a lack of supply.

“The losses in Perth are so small, it’s like finding a needle in a haystack,” she said.

“For home owners who have been in the market, particularly capturing the last price boom, they are really reaping the benefits of that price growth upon resale.”