Australian resellers made a record $306k of profit in Q4 2024
While Australians notched a new record median profit for reselling property in the last quarter of 2024, houses recorded higher profits as resellers saw units in Sydney and Melbourne driving up losses.
CoreLogic’s Pain & Gain Report for the December 2024 quarter revealed the median nominal gain for dwelling resales hit a series high of $306,000 since the data series began in the mid-1990s.
The report analysed 95,300 property resales during the last quarter of 2024 and showed that 94.8 per cent of sellers made a profit nationwide, a 0.3 per cent drop from the previous quarter.
CoreLogic’s head of research, Eliza Owen, attributed the slight decline to the slip in national home values at the end of 2024.
“This subtle increase in loss-making sales makes sense because any decline in real estate values increases the chance of loss-making sales occurring,” Owen said.
The median loss for the 5.2 per cent of property resales in the December quarter was $45,000, up from $40,000 in the previous quarter and above the five-year average of $39,180.
The total nominal gains from resale in the December quarter were $35.6 billion, up from $35 billion in the previous quarter.
Meanwhile, combined losses jumped from $267 million in the September quarter to $302 million.
Owen said 2025 would be profitable for sellers, following the RBA rate cut and favourable economic conditions.
“Given the strong relationship between capital growth and the rate of profitability and expected further easing in the cash rate this year, the rate of profitability from home resales will likely recover in 2025,” she said.
Across the capital cities, Brisbane took the top spot for profit-making resales in Australia, with almost all resales (99.6 per cent) in the city making a nominal gain.
Melbourne and Darwin registered profit-making sales of 89.2 and 71.7 per cent, respectively, and were the only cities to record a profit-making sales rate of less than 90 per cent in the December quarter.
Darwin and the regional Northern Territory markets also demonstrated the highest incidence of loss-making from real estate resales, at 28.3 and 23 per cent, respectively.
Units in Sydney and Melbourne most accountable for quarterly losses
Over the December quarter of 2024, loss-remaking resales comprised 5.2 per cent of total resales, with close to 5,000 resales making a loss.
Sydney and Melbourne accounted for 60.6 per cent of the 5,000 loss-making resales during the quarter despite representing only 34.2 per cent of the total resales in that period.
Most loss-making resales across Sydney and Melbourne were units, accounting for 47.2 per cent of loss-making resales across Australia in the quarter.
Owen attributed this outcome to the “off-the plan apartment boom” occurring in Sydney and Melbourne, and said that the surge of interest “clearly meant lasting losses” for sellers in both cities.
She said that the decreased profitability of units in Sydney and Melbourne reflected trends at the national level.
In the December quarter of 2024, 10.1 per cent of loss-making unit sales were recorded, up from 9.3 per cent in the previous quarter.
More broadly, houses were more profitable than units in each city nationwide and were far less likely to see a loss, with only 3 per cent of houses selling for less than the previous price.
Owen said the high level of unit development stemmed from the significant number of off-the-plan apartment purchases during the early to mid-2010s.
“This means elevated unit supply while demand in the investor market was cut off by tightening lending conditions in the late 2010s,” Owen said.
“The result has been much stronger growth in houses nationally in the past decade than units, at 80.5 per cent and 38.5 per cent, respectively.”
Of the sales in the December quarter of 2024, more than a third of loss-making resales in the three months to December had a short hold period of up to four years.
Owen stated that a short selling time increases the risk of loss of sellers, noting that 26.5 per cent of loss-making sales had a hold period of two to four years.
“Short selling times can increase the risk of making a loss, because you expose yourself to short-term cyclical movements, where value gains in property are generally long term,” she concluded.