The proportion of resales that made a profit increased across the country, according to CoreLogic
The Tasmanian capital of Hobart has been revealed as the capital city with the highest rate of profit-making resales as a proportion of all its resales - at 96.6% - in the three months to September 2020, according to recent figures from CoreLogic.
Nationally, CoreLogic revealed that the proportion of resales that made a profit was 88.1% or $24.8 billion in profits in the September 2020 quarter, up from 87.2%, or $19.8 billion, in the June 2020 quarter.
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Eliza Owen, head of research Australia at CoreLogic, said that the growth reflects the “resilience seen in the property market throughout 2020.”
“Each of the greater capital city markets, with the exception of Melbourne, saw an increase in the rate of profit-making sales over the September quarter,” said Owen. “The highest rate of profit-making sales was across Hobart, which has been the case since March 2018.”
Additionally, Owen said that coastal regional markets were also particularly profitable for sellers, with profit making sales representing over 95% of resales across six major coastal markets: Geelong in Victoria; Illawarra in New South Wales; the Mid North Coast in NSW; the Newcastle Lake Macquarie region in NSW; the Richmond Tweed region in NSW; and the Sunshine Coast in Queensland.
Additionally, an analysis of returns by hold period suggests a greater amount of gain comes from more time in the market, according to CoreLogic.
“Over the September 2020 quarter, the median hold period of re-sale events across Australia was approximately 8.5 years,” said Owen. “For profit making sales, the median hold period was nine years, while loss making sales were typically held for 6.7 years. For houses and units, typical hold periods were longer across profit making resales.”
Looking ahead, Owen said the Australian housing market is expected to improve further in the coming months.
“With record low mortgage rates, a faster than expected economic recovery and relatively low cases of COVID-19, profitability is tipped to trend upwards over the coming quarters,” said Owen.
