Profitability surges as median resale gains across capitals mark 15-year record

Units across the capitals saw a lower but still robust proportion of profit-making resales at 86.2 per cent, achieving a median profit of $215,000.

Nationwide, 97.5 per cent of house resales were profitable, while 88.3 per cent of unit resales experienced gains.

Domain’s chief of research and economics, Dr Nicola Powell, said that the surge in profitability around the nation could largely be attributed to longer holding times for properties.

“We’re actually staying in our homes for longer periods of time, which means that home owners are riding the waves of multiple property cycles, and therefore benefiting from that when they go to resell their home,” she told REB.

According to Powell, the data reflected the amount of growth that had occurred across the capital cities in recent years.

“Particularly when you’re looking at that profitability really shifting west, where we’ve got Perth leading in terms of the proportion of profit-making resales.”

Powell added that while prestigious suburbs saw the biggest dollar profits, much of the equity accumulation had been in middle-ring areas.

“In terms of the proportion of homes being sold at a profit, it was actually led by middle-ring suburbs, family-oriented suburban markets across our major capital cities.”

Powell said that it really shows the equity growth that they’ve seen within their homes, and that in itself helps to recycle back into the housing market because it gives them greater leverage.

“Often investors use their first investment to then leverage to get their second. I think that dynamic is probably what some are doing.”

Brisbane and Perth have highest proportion of profitability

Brisbane and Perth had the highest proportion of profitable house resales nationally, at 99.5 per cent, with median gains of $580,000 and $528,000, respectively.

The two cities also saw the greatest annual change in median house prices nationally, with increases of 22.9 per cent in Brisbane and 25.7 per cent in Perth.

“This reflects the strength and breadth of price growth since 2021, supported by strong migration flows and constrained supply,” Domain said.

Adelaide was close behind, with 98.2 per cent of house resales making a profit and median profits up 15.5 per cent annually to $539,500.

When it came to units, Brisbane saw more than 99 per cent of resales deliver a profit, a record-high proportion, with the median resale gain also reaching a record high of $325,000.

Domain noted that population growth, tight rental markets and constrained new supply have translated into broad-based equity gains, with Brisbane units now in wealth-creation territory.

Likewise, Perth and Adelaide also recorded record median unit profits of $226,050 and $290,000, respectively, with high shares of profitable resales at 96.8 per cent and 96.6 per cent, respectively.

Powell said that Perth and Brisbane had led growth over the last property cycle, reflecting an undersupply of housing during a period of strong demand.

“The aspect that really does unite Perth, as well as Brisbane, is strong rates of population growth, not only from overseas but also from interstate,” she said.

“Compared to other capital cities, Brisbane’s got that differentiating factor, which is obviously the upcoming Olympic Games, which means there’s lots of infrastructure spending which creates jobs and that in itself draws new residents to the area.”

Sydney records highest median gain

Despite Brisbane and Perth seeing the largest change in profitable house resales, Sydney continued to record the highest median gain nationally at $750,000.

Domain attributed the result to higher starting price points amplifying dollar gains over extended holding periods, positioning the Harbour City as the country’s largest reservoir of housing equity.

In comparison, Sydney’s units were slightly less profitable, at 87.2 per cent, recording a median gain of $216,288.

“Resale outcomes have been steadier than in Brisbane or Perth, reflecting more moderate recent price growth,” Domain said.

Regions

When it came to regional house resale profits, Queensland had the highest median profit at $395,000, along with a 98.4 per cent profit rate, the strongest of the regions.

Domain said factors such as population inflows, lifestyle demand, and constrained supply had supported steady price appreciation, resulting in significant realised gains for sellers.

NSW was close behind, recording a median profit of $350,500, with 97.5 per cent of resales delivering gains.

Many other regional markets also saw high house profitability outcomes, but slightly lower, while the Northern Territory recorded a negative change in profit, -24.6 per cent, falling to 78.4 per cent.

As for units, the regional markets outperformed the capitals, with a 95.8 per cent profit rate, compared with 86.2 per cent in the capitals.

Domain noted that longer owner-occupier hold periods and tighter supply pipelines had reduced volatility in the regions, compared to some innercity apartment markets.

While regional Queensland again recorded the highest median unit profit at $305,000, regional NSW led profitability rates at 97.0 per cent.

Powell said the data showed the strength of the housing market in recent years, but slower rates of price growth mean profitability might start to ease.

“We’re still expecting profit margins to be high, particularly as 10 years lengthen, but we are definitely in a different stage of the property price cycle where we’re still expecting prices to rise, but not as fast.

“What we’ve seen over the previous price cycle was that it was really about wealth creation, and when you’re looking at markets like Brisbane and Perth, they are firmly in their wealth creation phase.

“One of the things this report really highlights to me is the growing divide between those who have property and those who don’t, and that kind of inequality within our housing markets.

“There are many Australians locked into the rental market. Particularly, I think what this report highlights is the equity, the wealth, intergenerational wealth that happens within families that have homes.

“For me, it really is telling of why we’ve seen such a rise in the bank of mom and dad.”

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