Homeowners in some of Sydney’s most sought after pockets have been reselling their properties for an average of $1.3 million above the prices they paid for them, a new study indicated.
The CoreLogic pain and gain report examined the average profit home sellers made in various city markets over the first three months of the year and revealed most long-time owners had considerable equity in their properties.
“Profit” was measured as the average difference between the price they paid for the property and the resale price.
By this criteria, the majority of Sydney sales were profitable. Only 7.6 per cent of sellers made a loss on their properties.
Resellers made the biggest profits on the northern beaches. The median resale profit was $1.31 million. The average length of ownership for these sellers was just under nine years.
Sellers in the Blacktown council area also got well above their purchase prices: the median resale profit was almost $630,000, with the average hold period for the properties at eight years.
The average northern beaches home seller got about $1.3m above the price they paid.
Blacktown homeowners who sold only a few years after buying their properties tended to have a harder time making a profit.
Close to 7 per cent of Blacktown sellers made a loss on their properties and the majority had owned their homes just three years.
Other council areas where long-time sellers made big profits were the Hills Shire, Sutherland Shire and Woollahra. The median profit for these sellers was over $500,000.
CoreLogic noted the market may have shifted somewhat since the first three months of the year considering this was before the COVID-19 lockdowns, but this change may only be minor.
Sydney’s median home price fell 0.8 per cent over June and 0.4 per cent over May but grew over April and March, according to the research group.
COVID-19 has so far made more of an impact on real estate transaction volumes than prices. Picture: Tim Hunter.
Price movements have been small largely because few properties have come up for sale, reducing the level of choice available for buyers.
CoreLogic head of research Eliza Owen said government support for struggling households, such as the JobKeeper payment, also helped reduce distressed sales.
“The pain and gain results over the second half of 2020 could see an increase in the portion of loss-making sales, but the volume of sales activity may be more subdued,” Ms Owen said.
The Sydney region where sellers were most likely to make a loss on their properties was Burwood, where about a fifth of the properties changed hands for less than the owners paid. The bulk of the properties that sold for a loss in Burwood were units and there were few sales, CoreLogic noted.
CoreLogic head of research Eliza Owen.
About one in eight properties resold for a loss in Parramatta, Ryde and Strathfield, also predominantly units. Most of the units were resold about four years after the sellers bought them. Each of these areas has an abundance of new units available, particularly in high-rise blocks.
Realestate.com.au chief economist Nerida Conisbee said the larger choice of new units meant buyers could be picky and had more room to negotiate prices down.
Many of the units in these areas were also built to appeal to investors, who have been a less active buyer group over recent years due to lender restrictions, Ms Conisbee said.
Houses that appeal to families have been getting the most buyer inquiries. Picture: Tim Hunter
Other regions with higher losses were Liverpool and Rockdale, where about 10 per cent sales were at a loss.
BEST SUBURBS FOR AUCTIONS
Sellers in Cremorne, Leichhardt and Revesby were the most likely to sell successfully under the hammer over the past three months, auction sales data revealed.
Three in four auctions in these areas were a success over the period, which was significantly higher than the 51 per cent auction clearance rate reported for the Greater Sydney area, according to the CoreLogic data.
About two thirds of auctions were a success in Wollstonecraft, Bondi, North Bondi, Elizabeth Bay and Alexandria. Higher clearance rates in these areas suggested buyers were competing for a smaller pool of available properties – considered favourable conditions for auctions.
Auctioneer Michael Garofolo said scarcity factor gave auction sellers a boost.
Auctioneer Michael Garofolo of Cooley Auctions said properties that appealed to owner occupier buyers, especially upsizing families, tended to get the best results at auction.
Buyers were also willing to spend big at auction if they saw value: homes with rare features that many buyers wanted were still selling for high prices, Mr Garofolo said.