key takeaways

Key takeaways

The median nominal gain made on resales nationally was $290,000, while median losses were -$33,000.

Capital cities are driving the fall in profit-making resales nationally.

Profitability across both houses and units declined nationally quarter-on-quarter.

Nationally the median hold period for profit-making resales was 9.0 years.

The rate of profit-making sales across the Australian property market has fallen for the first time since August 2020, providing yet another sign that there’s been a turning point in housing conditions.

CoreLogic’s latest Pain & Gain Report, which analysed approximately 106,000 property resales that occurred in the March 2022 quarter, registered a modest 30 basis point decline in the rate of profitmaking sales, the first since the three months to August 2020.

While it was only a slight decline and the incidence of profitmaking sales fell to 93.7%, there were several factors pointing to further falls in the coming months.

Report

Our quarterly Pain & Gain report is another sign of a changing market for sellers.

The figures align with other key indicators such as the slowing growth rate of values, the increasing time it takes to sell a property, and a fall in sales volumes at a time when access to credit has become harder and interest rates are on the rise.

In May Australian dwelling values posted the first monthly decline in value since September 2020.

Against a backdrop of rising interest rates, tighter credit conditions, and affordability pressures we are likely to see the instance of nominal gains from dwelling resales erode throughout 2022, which will have an even greater impact on buyers who have entered the market more recently.

National pain & gain

In dollar terms the median gains from resales nationally were $290,000; the highest for Sydney dwellings ($415,000) and the lowest across Perth ($119,000).

Nationally, median losses on resales through the quarter stood at -$33,000.

Fig01

Higher hold periods have typically resulted in higher nominal capital gains with properties held for a period of 30 years or more achieving median gains of $781,750.

Outside of this, properties held between 24 and 26 years or purchased between 1996 and 1998 also achieved extremely high gains.

Properties were acquired relatively cheaply at this time because of a significant housing market downswing through the mid-90s.

Fig02

Our analysis shows the median hold period nationally is 9.0 years when properties were purchased during the March quarter of 2013.

Since then Australian dwelling values have increased 70.3% or the equivalent of around $309,000 in the median dwelling value across Australia.

Capital cities and rest of state regions

Australia’s capital cities are driving the deterioration in profit-making resales, falling 60 basis points to 93.3% in Q1 2022.

Leading the way was Melbourne where the rate of profit-making resales fell a full percentage point followed by Sydney’s fall of 60 basis points.

Regional areas remained strong, with the rate of profit-making sales lifting 10 basis points higher in the quarter, to 94.2%.

Hobart had the highest incidence of nominal gains for the 15th consecutive quarter, at 99.0% followed by the ACT, which recorded a record high 98.8% of resales making a nominal gain.

Fig03

Regional Victoria had the highest rate of profitable sales in the regions, also at a record high of 99.4%.

Hobart dwellings have been in incredibly high demand over the past few years, being one of two capital cities – alongside Sydney – where dwelling values have doubled in the past decade.

Both houses and units have been popular, however, conditions across this market may be starting to shift.



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