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Rising profits for home resales highlight strength of real estate market

On Mar 27 2014
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The growing residential property market in Australia has continued to rise from strength to ...

The growing residential property market in Australia has continued to rise from strength to strength after beginning to stabilise over the last 12 months. Following the release of the latest RP Data Pain and Gain report, it can be seen that this growth is set to continue well into the new year - great news for those interested in selling a house

This report highlights the profits and losses earned by owners who are reselling a home after purchasing it and holding it for a period of time. During the December quarter in 2013, there were approximately 74,595 residential properties resold across the nation.

From these, 9.7 per cent of these homes recorded a loss over their original purchase price. The average loss per property was recorded at $63,215 and resulted in a total quarterly sales loss of $457.3 million. While this may seem like a big figure, it's comforting to know that this is a reduction over the previous quarter (September), which recorded a total of 11.1 per cent of sales as loses. Furthermore, 12 months earlier (December 2012) saw 12.6 per cent of residential resales result in a loss. 

In contrast, 90.3 per cent of all resales made during the December quarter were profitable for the vendor. In fact, 31. 8 per cent of these sales managed to at least double the original purchase price, which is a fantastic result for anyone to experience from their property sale. 

The overall gross profit for all these property resales was a significant $15.2 billion - or an average of $225,088 per residence - highlighting the growing strength of the nation's real estate market. This is expected to continued into the future, which could spell good news for anyone considering selling their real estate in the coming months. 

A pattern emerging among the data highlighted the difference between a profit and a loss from the resale was related to the amount of time the property had been owned by an individual. For example, the homes that suffered a loss had only been owned for an average of 5.3 years. 

On the other hand, properties recording a profit had been owned for an average of 9.9 years, with capital gains potentially playing a factor in the growing value of the nation's real estate. However, the homes that recorded a profit of more than 100 per cent  had been owned for an average of 16.2 years. 

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