Nearly 95% of sales turned a profit in the final three months of 2024, according to new CoreLogic data.
With 95,300 homes sold, total resale profits hit a record $35.6 billion.
However, while most sellers made gains, the share of profitable sales dipped slightly from the previous quarter.
Meanwhile, loss-making sellers saw a larger median shortfall of $45,000.
This trend reflects a softening in home values towards the end of 2024, but with the Reserve Bank of Australia (RBA) already cutting rates, both property prices and resale profits are poised for a strong rebound in 2025.
"Given the strong relationship between capital growth and the rate of profitability and expected further easing in the cash rate this year, the rate of profitability from home resales will likely recover in 2025," CoreLogic head of research Eliza Owen said.
Short hold periods behind lion's share of resale losses
CoreLogic data shows a gradual rise in short-term resales – properties sold within two to four years of purchase.
More than one-third of loss-making sales involved properties held for four years or less, with Melbourne making up a significant 40% share of those losses.
"Short selling times can increase the risk of making a loss, because you expose yourself to short-term cyclical movements, where value gains in property are generally long term," Ms Owen said.
"The high incidence of loss among Melbourne resellers in such a short hold period reflects other indicators of financial stress in this market, such as weaker economic outcomes for the city since the pandemic, elevated listings volumes, and weaker property market conditions more broadly."
Melbourne is one property market where house prices haven't returned to levels seen during the pandemic.
Property values in the Victorian capital remained 6% below their March 2022 peak as of 28 February.
It's a similar story in Hobart and Canberra, where property prices respectively remain 12% and 7% lower than their 2022 peak.
Darwin property values, meanwhile, peaked in 2014 and sit 6% lower than they did then as of the latest data.
Unsurprisingly, the four cities are overrepresented when it comes to loss making resales:
Fixed rate cliff pain eases as interest rate pressure drops
In recent years, short hold periods and resulting loss making sales appeared to correlate with the fixed rate cliff – the expiry of ultra-low fixed rates locked in from 2020 to 2022.
Borrowers who secured fixed rate periods of three years or less in May 2021, when fixed rates hit rock bottom, might have locked in home loan rates as low as 1.95% p.a.
Fast forward to May 2024, and the typical variable rate on a new home loan had surged to 6.27% p.a., according to RBA data.
For a homeowner with a $600,000 loan over 30 years, their monthly repayments may have jumped from around $2,200 in 2021 to approximately $3,700 in 2024 – a 68% increase.
Houses lead in profitable sales
The data also shows a stark difference in the resale values of units compared to houses.
Around one fifth of loss making resales in the December quarter came from unit sales in Melbourne's inner city, and Sydney's Paramatta and Ryde.
Australia-wide, one tenth of units were sold for less than their previous purchase price, while only 3% of houses were sold at a loss.
"The off-the-plan apartment boom has clearly meant lasting losses for sellers in Sydney and Melbourne," Ms Owen said.
Image by Steven Ungermann on Unsplash
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