Report reveals profit-making resale hotspots

by Madison Utley19 Jan 2021

Data just made available has revealed where the largest proportion of dwellings across Australia were sold for a profit in the three months to September 2020.

According to CoreLogic’s Pain and Gain report, Hobart remained the capital city with the highest rate of profit-making resales at 96.6% – a position it has held since March 2018.

The rest of the greater capital city markets, excepting Melbourne, also posted an increase in the rate of profit-making sales over the quarter.

The data also confirmed the trend of profit-making sales increasing more rapidly across the regions than capitals over the quarter; regional Victoria came in as the most profitable ‘rest of state’ region, with 97.5% of dwellings sold for a profit in the three months to September.

Eliza Owen, CoreLogic head of research Australia, provided further context.

“The combined regional Australian market saw the rate of profit-making sales increase 150 basis points, to 89.2% in the September quarter, while the rate of profitability across capital city markets expanded 30 basis points, to 87.2%. This also reflects the divergent performance between regional and capital city real estate markets through 2020,” she said.

“Coastal regional markets were also particularly profitable for sellers, with profit making sales representing over 95% of resales across six major coastal markets: Geelong, Illawarra, the Mid North Coast, the Newcastle Lake Macquarie region, the Richmond Tweed region and the Sunshine Coast.”

Notably, a higher portion of property investors (17.1%) sold their dwelling at a loss compared with owner occupiers (10.4%).

“Despite the higher rate of loss observed in investor sales in the quarter, the rate of properties re-sold at a loss was down from 18.0% in the June quarter, while the rate of loss making sales among owner occupiers was down from 11.1%,” Owen added.

“The only region where there was a higher incidence of loss-making sales among owner occupiers was across Hobart. This has been a consistent trend across the past few quarters. In the three months to September, 3.2% of owner occupied resales saw a nominal loss, compared with just 1% of investor sales.”

CoreLogic data indicates dwelling values across Hobart have seen annualised growth of 7.9% for the five years to December 2020 – the highest annualised growth rate of the capital city markets.

“The relatively low level of loss making sales among both cohorts reflects the exceptional capital growth across the Hobart market,” Owen said.