Report reveals Perth’s pain-free property market where vast majority of sales make a profit

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The vast majority of houses sold in the Perth metro area last quarter made a profit, with every property in Cottesloe and East Fremantle making a buck.

Among all home owners who sold in the June quarter for a gain, the median nominal gain was $324,000, Cotality’s Pain and Gain Report, released today, showed.

Most property sales in Perth are making a buck.

The median profit for a Cottesloe house was $694,750 – putting it third on a national list of biggest gains – while in East Fremantle it was $440,000.

Most people who sold for a profit held on to their property for nine years.

Of the few that sold at a loss, most were in the local council area of Perth, which recorded 13.3 per cent of sales at an average loss of $40,000, despite most properties being held on to for about 12 years.

The report said Perth – where 98 per cent of sales made a profit – had the third-highest rate in the country.

“This remarkable turnaround coincided with an almost 80 per cent increase in home values over the past five years, which has driven up the rate of profit-making sales from a low of 56.1 per cent in the June 2020 quarter,” it read.

“The rate of profitability is expected to remain high, as recent rate cuts have delivered yet another uplift in the rate of capital growth to 3.1 per cent in the three months to August.”

Cotality head of research Eliza Owen said most of the losses across the country were concentrated in markets that still hadn’t returned to their peak values.

“The top 10 markets for loss-making resales accounted for a third of all losses in the quarter, compared to one quarter over the decade average,” she said.

“Some owners may also be cutting their losses as conditions improve, choosing to sell after holding for long periods.

“Between June and August of this year, the likelihood of a loss-making resale has broadly reduced as national home values rose 1.3%, and fewer markets at the suburb-level recorded quarterly falls across Australia.”

Owen said the gap in profitability between regional and city markets was narrowing.

“In the three months to August, capital city values rose 1.9 per cent, overtaking the 1.6 per cent rise in regional Australia, pointing to a further narrowing ahead,” she said.

AMP chief economist Shane Oliver pointed to rising prices in mid-tier cities such as Brisbane, Adelaide and Perth, as an example of a rising tide lifting all boats.

Owen attributed the gains in regional coastal areas to the high capital growth in lifestyle locations in recent years.

But after this week’s National Climate Risk Assessment report that warned of rising sea levels, Owen said climate change could affect future property buyers’ decisions.

“It could influence prestige property buying decisions, and potentially even some divestment from luxury coastal markets … [and] inland tree-change areas that are subject to more intense summers as well,” she said.

with Elizabeth Redman