Source: CoreLogic
The CoreLogic report analyzed approximately 90,000 dwelling resales, uncovering that an impressive 94% of these transactions recorded a nominal gain. This marks a substantial increase from previous quarters, highlighting sustained growth in home values. The median gross profit rose to $310,000, underscoring the market's healthy state.
Key metrics reflect the recovering profitability in the housing market since early 2023. A significant decline in loss-making sales further underscores this positive trend. In Q4 2023, only 6.0% of resales recorded a nominal loss, with the volume of such sales falling by 5.1% compared to the previous quarter. The total nominal profit from resales reached $29.9 billion, up from $28.7 billion in Q3, showcasing the market's strong performance.
Regional markets are outperforming capital cities in terms of profitability. In Q4 2023, 95.5% of resales in regional Australia recorded a nominal gain, compared to 93.2% in combined capitals. This trend is attributed to the lingering value added from the COVID boom and sustained demand for regional properties, driven by a more favorable cost of living and lifestyle appeal.
City-specific performance also reveals positive trends. Adelaide remains the most profitable capital city market for the fifth consecutive quarter, with more than 98% of resales making a nominal gain. Perth also saw significant improvement, with the rate of loss-making sales reducing to 8.4%, marking its most profitable period since July 2015.
Houses continue to deliver higher rates of profit-making sales compared to units. In Q4 2023, 97.0% of house resales made a nominal gain, whereas 88.2% of units recorded a profit. However, the gap between the profitability of houses and units is narrowing, suggesting a shift in market dynamics as affordability and supply constraints come into play.
The higher resale profits for houses are further bolstered by a shorter median hold period for loss-making house sales. The median hold period for resales across Australia in Q4 2023 was 9.0 years, with national home values having increased by 63% since November 2014. Loss-making house sales had a median hold period of 5.9 years, while loss-making unit sales had a median hold period of 8.4 years, reflecting weaker capital growth performance for units.
The CoreLogic Pain & Gain Report for Q4 2023 paints a positive picture of Australia's property market. With increased profitability, declining loss-making sales, and robust performance in both regional and capital city markets, the data underscores the market's resilience and growth. As we move further into 2024, the trends highlighted in this report offer a solid foundation for optimism and confidence in the continued strength of Australia's property sector.
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