Houses in Sydney’s affluent suburbs delivered the biggest windfall for sellers during the March quarter as scarce supply and strong demand handed them more than $1 million in gross profits on average, CoreLogic’s Pain and Gain report shows.
Every house sold in Randwick, Ku-ring-gai and Canada Bay was profitable, rewarding vendors gains exceeding $1.1 million on average, while all inner west house sales made an average $850,000 profit.
Every house sold in Randwick and Canada Bay in the March quarter delivered at least $1 million in gross profits.
A combination of strong long-term gains and high demand for Sydney’s premium markets, as well as higher buying power, likely contributed to the strong gains, said Eliza Owen, CoreLogic head of research.
“High value, premium markets of Sydney tend to have wealthier households, the properties are tightly held and the supply is often limited, so that usually contributes to higher gains from resale across high-end markets pretty reliably,” said Ms Owen.
“In the past five years, the top 25 per cent of Sydney home values have increased 18 per cent and in the March quarter, the high end of the market was the first to show signs of recovery.”
Meanwhile, nearly all house sales in Melbourne’s wealthier areas such as Bayside, Boroondara and Port Phillip were sold for more than $900,000 profit on average.
Units in premium suburbs Mosman, Woollahra, Waverley and Randwick also racked up strong gains, with a large chunk of all sales achieving between $352,500 and $495,000 gross profits on average.
Thomas McGlynn, a Sydney-based selling agent and the chief executive of BresicWhitney, said the big gains coincided with heightened buying activity at the start of the year.
“We saw very intense competition among buyers at that time because of extremely low numbers of property for sale,” Mr McGlynn said.
“I would say that that was probably close to the peak of activity that we’ve seen so far this year. At that time, buyers were more confident about pushing to, or even beyond, their limits to secure property, which has obviously flowed through to profits for sellers.”
But property investors who offloaded their investments within three years of purchase were not so lucky.
Nearly six out of ten investor-owned units held for less than three years in Melbourne’s Mooney Valley were sold for a loss of $24,000 on average during the March quarter, and more than two out of five investment units resold within three years in Stonnington made an average loss of $65,000.
In Sydney’s northern beaches, more than one in four units sold within three years incurred a $70,000 loss on average, while more than a third of units sold in Parramatta notched up an average loss of $32,000.
Even investment houses bought and sold within three years suffered deep losses, such as those on the NSW Central Coast where one out of eight properties sustained a $100,000 loss on average. Meanwhile, in Fairfield in outer Sydney, nearly three out of 10 ex-rental houses made an average loss of $21,000.
“Unfortunately, I think the June quarter might look a little more rocky in terms of loss-making sales, just because this is when we’ll start to see more fixed-term expires reflected, and more households feeling the pinch of higher mortgage rates,” Ms Owen said.
“Having said that, an offsetting factor would be a continued recovery in home values.”
CoreLogic’s daily home value index showed Sydney prices have already risen by 1.6 per cent since the start of the month, after increasing by 1.8 per cent in May.
While buyers remained active in the market, they were showing less confidence about pushing their financial limits, said Mr McGlynn.
“I’ve noticed that in the recent two weekend auctions, people are more hesitant to go beyond their limit, so I think we’re starting to see some effects of the rising interest rates with regards to people’s appetite to push past their limits,” said Mr McGlynn.
“People are anticipating another two or three more interest rate rises, so they’re making those adjustments to their bidding strategies, that’s why we’re no longer seeing the same level of ferocity at auctions.”
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