Hobart is the capital city with the highest rate of profit, making resales at 96.6%, while regional Victoria is the most profitable 'rest of state' region with 97.5% of homes selling for a profit in the three months to September 2020.

That's according to CoreLogic's Pain and Gain report for the September 2020 quarter.

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Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

Nationally, property resales that made a profit increased by $5 billion since the June 2020 quarter.

Eliza Owen, CoreLogic’s Head of Research Australia, says this 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. The highest rate of profit making sales was across Hobart, which has been the case since March 2018," Ms Owen 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.

"The Sunshine Coast hit a record high rate of profit making sales in the September quarter at 96.4%."

When compared with capital cities, regional property markets saw a higher portion of profit-making sales. 

“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%," Ms Owen said. 

"This also reflects the divergent performance between regional and capital city real estate markets through 2020.”

Houses rake in $100,000 more in profit than apartments

The report found there was generally a far higher rate of return for houses than for units, with houses selling for an average profit of $225,000 compared with units, which sold for an average return of $125,000.

“Profitability across both houses and units rose across Australia in the September 2020 quarter. The portion of properties sold at a loss among houses fell from 10.2% in the three months to June to 9.6%, while the portion of loss making unit sales fell from 21.4% to 19.6%," Ms Owen said.

According to the report, apartments were two times more likely to sell for less than houses in the September quarter.

Investors sell at a loss

More investors sold their property at a loss than owner occupiers, according to the report: In the September quarter, 17.1% of investment properties sold at a loss compared with 10.4% of owner occupied sales.

However, these figures are an improvement on the June quarter.

“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%," Ms Owen said.

“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."

Ms Owen said the report has shown that Hobart is one of the hottest housing markets in the country. 

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

"CoreLogic home value indices show dwelling values across Hobart have seen annualised growth of 7.9% for the 5 years to December 2020, the highest annualised growth rate of the capital city markets."

Photo by mick orlick on Unsplash

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