Property sellers cash in at record rate

author-avatar By on September 29, 2021
Property sellers cash in at record rate

New research from CoreLogic shows 91.5% of resales during the June quarter recorded a profit, the highest level of profitability in a decade.

The Pain and Gain Report analysed data from 106,000 real estate re-sales, and showed that tight listings, record low mortgage rates and Australia's extraordinary growth in housing values led to continued strong resale gains.

Property owners who resold after just two years pocketed a median return of $123,000, while those cashing in after more than 30 years of holding a property, achieved a median return of $712,000.

CoreLogic’s Head of Research Eliza Owen, says nationally, profit-making residential property sales have increased for four consecutive quarters, with the latest report showing profitability is at a ten year high.

"This number really does reflect the extraordinary recovery in housing values following a small downswing induced by the initial impact of COVID-19," Ms Owen said.

The typical median hold period on all resales for the quarter was 8.8 years, with a national median gross resale profit of $265,000.

Regional sellers cash in

Re-sale gains were particularly strong in the country's regional and tree change markets.

Record high rates of profitability extended to regional Victoria's entire dwelling market, where 98.7% of resales were above the purchase price.

The regional push has exploded through the pandemic, but has proven challenging for some renters, especially in popular coastal markets

Fresh worries for lockdown renovations

According to Hipages data, those stuck at home in lockdowns have been prioritising renovations. 

However, with this surge in spending in lieu of supply shortages has seen prices skyrocket. 

According to the report, labour costs have gone up as a result, with builders, painters, concreters, tilers and garden maintenance workers having the biggest increase in requested jobs since July. 

There has been an average 35% price increase for extension, 18% for kitchen renovations, and 15% for bathroom overhauls.

Average spend on renovations over the past year has also increased 5% to $21,000.


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Rates correct as of October 23, 2021. View disclaimer.



Image by Kitera Dent via Unsplash

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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Aaron joined Savings.com.au in 2021. He is a finance journalist with a keen interest in property, the share market, and improving financial literacy in young Australians.

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