Data reveals Australia’s most profitable suburbs

Hobart continues to lead the nation for profit-making home sales, with profitability across markets tipped to rise in the coming months as low mortgage rates, improving economic conditions and rising consumer sentiment combine to result in an increase in happy vendors.

CoreLogic’s latest Pain & Gain report, which analysed around 72,000 property resales across Australia, showed that 96.6 per cent of house sales in Hobart made some sort of a gain in the three months to the end of September.

Unit sales in the Tassie capital also led the nation, with 97.1 per cent making a profit.

Across all markets, 88.1 per cent of resales made a profit, equating to $24.8 billion in gains, up from 87.2 per cent or $19.8 billion in the three months to the end of June.

“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,” 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 per cent, says Ms Owen.”

Ms Owen said profit-making sales increased more rapidly in regional locations as compared to capital cities, a further indication of the shift in buyer preferences that occurred throughout 2020.

The data showed 89.2 per cent of resales in regional locations made a profit in the September quarter, an uplift of 150 basis points from the previous report.

Houses generally provided a higher rate of return than units, with the average return for a detached house $100,000 higher than a multi-residential property.

A higher proportion of Investors, however, sold their properties at a loss compared to owner occupiers.

The report showed 17.1 per cent of investor-owned properties sold at a loss in the September quarter, compared with 10.4 per cent of owner-occupied sales.

“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 per cent in the June quarter, while the rate of loss making sales among owner occupiers was down from 11.1 per cent.

“The only region where there was a higher incidence of loss making sales among owner occupiers was across Hobart.”

Ms Owen said this was a consistent trend across the past few quarters.

“In the three months to September, 3.2 per cent of owner occupied resales saw a nominal loss, compared with just 1 per cent of investor sales,” she said.

“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 per cent for the five years to December 2020, the highest annualised growth rate of the capital city markets.”

Ms Owen said she expected the proportion of profit-making sales to increase further in the coming months.

“With record low mortgage rates, a faster than expected economic recovery and relatively low cases of COVID-19, profitability is tipped to trend upwards over the coming quarters,” she said.

“The main risk to a continued improvement in home values, and housing profitability, is a resurgence in COVID 19 cases, and subsequent social distancing restrictions which would slow economic and housing market activity.”

New South Wales

Overall, 91.9 per cent of houses re-sold in Sydney for the three months to the end of September were sold at a profit, with 94.6 per cent of houses making a gain, compared to 87.7 per cent of units.

Sydney’s most profitable suburb over the quarter was Hunters Hill, a higher-end market with a relatively high median hold period of more than 10 years.

Just 2.2 per cent of sales in Hunters Hill were made at a loss, CoreLogic said, with the majority of sales being owner-occupied properties.

Other council regions at the top of the list included the Blue Mountains (96.6 per cent profit) and the Central Coast (95.5 per cent).

Victoria

Melbourne profit-making sales declined slightly over the report period, to 92.9 per cent, becoming the only Australian capital city to record a reduction in profitability.

However, Melbourne had the second highest proportion of profit making sales of any capital city outside of Hobart.

Melbourne’s best performer in the quarter was Moorabool, at 98 per cent profit, followed by Cardinia at 97.5 per cent, and Casey at 97.4 per cent.

Queensland

The proportion of profit-making sales rose by 2.1 per cent in the September quarter in Brisbane, to 88.7 per cent.

The data reflected a rise in dwelling values across Brisbane, while there was also a notable decline in the proportion of loss-making unit sales.

Nearly 67 per cent of Brisbane unit vendors made a profit in the quarter, up from 59.2 per cent from the previous three months.

Brisbane’s most profitable region was Redland, where 93.4 per cent of sales provided a median profit of $165,000.

Scenic Rim was next with 93 per cent profit, followed by Moreton Bay at 92.8 per cent.

South Australia

Adelaide also recorded a rise in profit making sales, with 90.5 per cent of resales sold at a higher price.

The City of Churches was led by Walkerville, where all of the properties sold in the quarter were made at a profit.

The Adelaide Hills also performed strongly, with 97.1 per cent of sales making a gain, followed by Marion at 94.6 per cent.

Western Australia

Perth’s proportion of profit-making sales reflected its rising real estate market, rising to 67.5 per  cent in the September quarter, from 63.1 per cent in June.

Houses provided better returns in Perth, with 71 per cent of houses sold for a profit over the period, compared with just 46.7 per cent of units.

No seller in Perth’s prestige suburb of Peppermint Grove made a loss in the quarter, while 88.9 per cent of sellers in Cambridge made a profit.

The near-river suburb of Nedlands also provided strong returns, with 85.7 per cent of sales making a gain.

Tasmania

Hobart’s 96.6 per cent of profit-making sales led the nation, a title it has held since March 2018.

No losses were made in the quarter in Derwent Valley or Sorell, while 98.6 per cent of sales in Kingborough were made at a profit.

On a median profit basis, the Hobart council region provided the best results for sellers, with a median profit of $285,000.

Northern Territory

Darwin recorded the weakest rate of profit-making sales among capital city markets, with fewer than half (49.6 per cent) of properties sold in the quarter making a gain.

The Litchfield LGA area was Darwin’s top profit maker at 63.9 per cent, with a median return of $127,000.