- 20 of the 30 most profitable Australian areas for property deals were regional
- Overall, 89.9% of all transactions were made for a higher price than previously
- The median profit was $230,000
Last week, CoreLogic found that Hobart was the most profitable capital city – comparing sale price to what it sold for last time – according to their ‘Pain and Gain’ report (December 2020 quarter).
Looking around the country, the same report has shown that 20 of the 30 most profitable Australian areas for property deals were regional.
The latest analysis looked at 98,000 property sales around the country. Overall, 89.9% of all transactions were made for a higher price than previously. The median profit was $230,000.
Both these numbers were higher than for the previous quarter.
Of course, comparing apples with apples and avocados makes this statistic very general. Some properties resale within a year, some have not been on the market for decades.
However, the increase in profit does seem to coincide with most of the country being (or coming out of) lockdown restrictions, and an improvement in economic fundamentals more generally.
Looking deeper into the data, houses tended to make more profit more often than units (93% as opposed to 81%), and owner-occupiers did better than investors (92% compared to 85%).
The most profitable areas across NSW and Victoria were all in regional markets, including non-coastal regional centres such as Bathurst, Mildura and Ballarat.
Highest incidence of profit-making sales by State, local government authority: December 2020 quarter
This coincided with quarterly growth rates in the December quarter of 3.5% in Bathurst, 4.5% in Mildura, 3.4% in Ballarat, as well as a broader uplift in affordable, regional centres of NSW and Victoria through much of 2020.
The results partly reinforce some of the trend for established, regional markets that offer space and affordable houses (as opposed to the waning unit demand in major cities) through the pandemic.
Regional areas have been profitable for some time. The average profit-taking sales over the past decade have ranged from 80.7% in Busselton, Western Australia, to 96.9% in Ballarat, Victoria.
Some of the most profitable regions include highly popular lifestyle centres such as Noosa (Qld) and Bellingen (NSW). In both areas, owner-occupancy is above 75%, with the median hold time in Bellingen being more than 14 years.
“With most Australian housing markets experiencing price increases through the first few months of 2020, it is expected that the proportion of profit-making sales will continue to rise at the national level.
“It is worth noting that these results are the gross profit between the original sale price and the transaction over the December 2020 quarter, and does not take into account transaction costs, or costs incurred for maintenance or improvements to the property.”
Eliza Owen, Head of Research, Core Logic
As CoreLogic concludes, “recent weeks of flooding, if not the past 12 months of extraordinary events, have shown that housing market activity, and ownership and transaction costs, can quickly change the outlook for profitability in real estate in certain markets.”
