Home sellers are enjoying record profits while Melbourne's property market recovery accelerates. Meanwhile, high-density apartment markets continue to struggle and auction clearance rates hold firmly above 70% in major markets.
Home Sellers Rake in Record $306K Profits
Australian property continues to deliver exceptional returns with home sellers achieving a record $306,000 average gross profit in the December quarter, according to CoreLogic's latest Pain and Gain report.
Key findings from the report:
- 94.8% of sellers made a nominal profit in Q4 2024
- Total nominal resale profits reached $35.6 billion
- Only 5.2% of properties sold at a loss (up slightly from 4.8%)
Tim Lawless, CoreLogic's research director, believes this strong profitability trend will continue:
"I think property profits will rise this year because prices are bouncing back. The dip in home values early this year has been erased through February, so it's hard to see profitability falling, at least over the medium term."
The City-by-City Profit Rankings
Property investors are seeing dramatically different results depending on location, with some markets delivering near-perfect profit rates:
City: Profit-Making Sales
Brisbane: 99.6%
Adelaide: 99.1%
Perth: 97.4%
Sydney: 92.5%
Canberra: 93.3%
Melbourne: 89.2%
Darwin: Under 90%
Brisbane's Dominance: Brisbane claimed the top spot with an astonishing 99.6% of all resales delivering a profit - a testament to the city's strong growth trajectory since 2021.
Melbourne's Turning Point: While Melbourne was one of only two capital cities with profit-making rates below 90%, recent data shows a significant turnaround is underway.
"Changing of the Guard" - Melbourne's Remarkable Comeback
After 10 consecutive months of price declines, Melbourne's property market has finally turned a corner:
- Home values rose 0.4% in February
- CoreLogic's daily house price index now shows Melbourne with 0.4% monthly growth
- Sydney is growing at 0.5% monthly, outpacing previously high-performing mid-sized capitals
Tim Lawless describes this as a fundamental shift in market dynamics:
"There has been a real changing of the guard. Now, mid-sized capitals like Brisbane and Perth are sitting at the bottom of the list, while Sydney and Melbourne seem to be leading a mild recovery trend, which is a real turnaround from where those markets were pre-rate cut."
Eliza Owen, CoreLogic's head of research, points to Melbourne's improved affordability as a key driver of renewed buyer interest:
"I think people are recognising it's a good time to buy in Melbourne as this market has become more affordable, sitting about 6 per cent below its peak in 2022."
Buyer Sentiment Rebounds Dramatically in Victoria
The February rate cut has triggered a powerful psychological shift among Melbourne buyers:
- Westpac Consumer Sentiment Index jumped 15.3% to 106 points in March
- This follows an 11% gain last month - the biggest increase across all states
- National "time-to-buy-a-home" index rose 4.3%
Adam Welling, a Melbourne-based real estate agent with Compton Green, reports an immediate market response:
"We instantly saw higher selling prices being achieved at auctions or private treaties when the rate was cut. Week after week, we're seeing buyers becoming more confident in buying before auction and there's also been a rise in competitive bidding at auctions, which are both signs of a bull market."
Mortgage Activity Surges as Buyers Rush In
Lenders are reporting a significant uptick in borrowing activity, suggesting strong momentum building in the property market:
- Mortgage pre-approvals up 30% in January-February compared to last year
- First-home buyers and upgraders increasingly active
- Buyers now proceeding with purchases rather than letting pre-approvals expire
Jacob Decru, a mortgage broker with Loan Market in Melbourne, explains:
"We saw a strong pick-up in first-home buyers and upgraders getting ready to buy, and those who were pre-approved are now going ahead with their purchases, unlike last year when they were just letting it expire or roll over. I think there's a feeling that property markets will go up later this year and they don't want to miss the boat."
The Growing House-Apartment Divide
Despite the overall positive trend, a stark performance gap exists between houses and apartments:
Houses outperform substantially:
- Only 3.0% of houses sold at a loss
- Houses have grown 80.5% nationally since 2015
Apartment markets struggle:
- 10.1% of units sold at a loss (up from 9.3%)
- Units have grown just 38.5% since 2015
- Sydney and Melbourne apartments account for 47.2% of all unprofitable resales nationally
The hardest-hit apartment markets:
- Inner Melbourne: 734 loss-making resales
- Sydney's Parramatta: 256 loss-making resales
- Sydney's Ryde: 163 loss-making resales
Nerida Conisbee, Ray White's chief economist, cites quality concerns as a significant factor:
"A lot of those apartments were built quite cheaply so many home buyers are wary about quality. The costs of repairs and maintenance are also quite expensive, so sellers are taking a big hit when selling because buyers would factor them into the purchase prices."
Auction Markets Hover Around Critical 70% Threshold
Auction clearance rates remain robust in the major markets:
- Sydney: 71.4% preliminary clearance rate (up from 70.7%)
- Melbourne: 70.3% (slightly down from 70.5%)
- National auction volumes: 2,550 properties (up from 1,572)
This marks the sixth consecutive week that Sydney's clearance rate has remained above 70%, indicating sustained market strength following the February rate cut.
However, BresicWhitney CEO Thomas McGlynn believes further monetary easing is needed for the market to fully accelerate:
"Right now it's a heartbeat market – one minute you think it's up, and one minute you think it's down."
He suggests three to four additional rate cuts are required to drive more significant and consistent market momentum.
Market Balance Shifting as Supply Remains Constrained
The latest auction data reveals important insights about the changing supply-demand dynamics in the market. With 2,550 properties sent to auction compared with 1,572 the previous week (which was affected by Melbourne's long weekend and weather events), supply has improved but remains constrained relative to buyer demand.
CoreLogic's Tim Lawless has noted that the market appears to be moving from a buyer's market toward a more balanced environment:
"The downward pressure in values that we saw through late last year seems to be coming to an end, and we're now seeing a healthier balance between buyers and sellers."
This shift in market balance is evident in the auction clearance rates, which continue to hover around the critical 70% threshold in Sydney and Melbourne. Sydney recorded a slight rise in preliminary clearance rates to 71.4% last week (from 70.7% the previous week), while Melbourne remained stable at 70.3% (slightly down from 70.5%).
Lawless believes these strong clearance rates are significant for future price growth:
"The relatively strong clearance rates are probably an early sign that the advertised supply overhang is going to gradually reduce, which will eventually lift prices."
Domain's chief of research and economics, Nicola Powell, agrees that the February rate cut has been a catalyst for increased buyer activity:
"The rate cut is the spark that some buyers probably needed to feel that confidence to return into the market. I think Australians have been waiting for so long for that rate cut to come, and I think that is helping them make those purchasing decisions."
This fundamental rebalancing of market dynamics provides a strong foundation for sustained price growth as we move deeper into the rate-cutting cycle.
Hold Period Matters: Short-Term Sales Face Higher Risk
The CoreLogic data reveals a critical insight for investors: property ownership timeframes significantly impact profitability outcomes.
Key findings on hold periods:
- Loss-making sales had a median hold period of just 7.6 years
- Profit-making sales had a longer median hold period of 9.3 years
- Over one-third of loss-making resales had short hold periods of up to 4 years
- 26.5% of loss-making sales had a hold period of just 2-4 years
This data underscores the risks of short-term property investment strategies, particularly in volatile market conditions.
Godfrey Dinh, CEO of Futurerent, sees these findings as validation of a long-term investment approach:
"These results indicate that it’s actually statistically very hard not to make money if you buy quality properties in supply constrained markets and ensure you have the income and / or access to liquidity to enable you to hold for the long term."
Eliza Owen, CoreLogic's Head of Research, explains the mechanics behind this pattern:
"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."
Melbourne particularly affected by short-hold losses:
- Nearly 40% of loss-making resales held for 2-4 years were in Greater Melbourne
- Melbourne's Inner market accounted for 6.7% of all loss-making resales in this short hold period
Owen notes these findings align with other indicators of financial stress in Melbourne:
"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."
This data reinforces the traditional wisdom that property investment typically performs best as a medium to long-term strategy, allowing investors to ride out market cycles and benefit from compound growth over time.
Value Hunters Target Affordable Areas
As affordability constraints intensify, buyer activity is shifting to relative value areas:
Sydney's Inner West boom:
- Eastern suburbs median house price: $3.79 million
- Inner West median house price: $2.45 million
- Significant buyer migration from east to west
Alister Barret of The Agency Inner West notes:
"As more buyers seek affordability, they've extended their property searches to include suburbs in the areas that were previously less sought after."
Melbourne attracts value-seeking buyers: Melbourne's improved affordability compared to both its previous peak and other capital cities is attracting interest from multiple buyer segments, including interstate investors. With Melbourne sitting about 6 percent below its 2022 peak, the value proposition is compelling for many buyers.
Cate Bakos, a Melbourne buyer's agent, reports strong competition in the market:
"We've seen much higher volumes of buyers, both from the local areas and interstate investors, which are adding fuel to the market. Auction attendance is higher, bidders are pushing harder and I'm finding most properties have competitive interest. We're constantly seeing strong results exceeding the reserve."
Strategic Opportunities for Property Investors
The current market phase presents several compelling investment considerations:
- Melbourne's accelerating recovery
After prolonged underperformance, Melbourne now shows the strongest price growth among capitals while maintaining significant affordability advantages. - House vs. apartment strategies
Exercise caution in high-density apartment segments, particularly in areas with historical oversupply issues and quality concerns. However, in supply constrained areas, existing apartments are starting to look “cheap” compared to houses and can generate good yields that can support a growing portfolio. - Yield and growth balance
Focus on established residential neighbourhoods with limited new supply - these areas offer both favourable rental yields and capital growth potential. - Market timing advantage
We appear to be at an inflection point, with sentiment improving but before the full impact of expected rate cuts drives broader price growth.
Godfrey Dinh, CEO of Futurerent, notes that the latest profitability data reinforces the importance of strategic property selection: "The CoreLogic Pain and Gain report illustrates why it’s actually “time in the market” rather than timing the market or anything else that matters most. If you’re prepared to invest for the long term, as long as you’re buying good quality properties and aiming at markets where supply is somewhat constrained, it is actually very hard to not make money. The stark contrast between the growth in house prices vs. units over the last 10 years is somewhat symptomatic of the impact of supply on prices, however we think the prices of units in supply constrained areas are presenting particularly good value for investors looking to build a portfolio."
How Futurerent Can Help You Capitalise
As the property market transitions to this new growth phase, strategic investors are positioning themselves to capture emerging opportunities.
Futurerent enables you to:
- Access up to $500K today across your property portfolio, with a limit of $100K per property
- Move quickly before increased competition drives prices higher
- Undertake strategic renovations to maximise returns on existing properties
Contact our team today to discuss how we can support your investment strategy in this evolving market landscape.
