One expert believes that 2023 has been "another good year" for re-sellers in the Illawarra.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
The average profit for home owners re-selling in Shellharbour and Wollongong LGAs is up slightly in recent months, new figures show.
Meanwhile, Kiama home owners are still selling their homes at a sizeable gross profit, although this figure has taken a six-figure hit recently.
Profitability from re-sales continued to rise amid a national recovery in home values, however short-term loss-making resales also increased, CoreLogic's Pain & Gain report for the September quarter shows.
In the Wollongong LGA, in the September quarter, 97.6 per cent of dwelling re-sales achieved a gross profit, with owners retaining their homes for an average of 9.1 years, and turning a median profit of $394,500.
By comparison, in the June quarter, 97.5 per cent of sales achieved a gross profit, with a median profit of $378,750 and average ownership of 8.6 years.
In the Shellharbour LGA, in the September quarter 97.8 per cent of re-sales achieved a gross profit, with owners retaining their homes for an average of 8.2 years, and turning a median profit of $379,000.
By comparison, in the June quarter, 97.3 per cent of sales there achieved a gross profit, with a median profit of $360,000, and average ownership period of 8.2 years.
CoreLogic's head of research Eliza Owen said the selling conditions across Shellharbour and Wollongong had generally seen an improvement compared to what was seen earlier in the year, as home values continued to rise.
"Home values were up 4.2 per cent in the three months to September across Shellharbour, and the rate of profitability was almost 98 per cent, up from 97 per cent in the previous quarter," she said.
"The three-month growth rate across Wollongong was 1.8 per cent, though this was a slightly slower growth rate than the three per cent rise observed in the three months to June.
"The rate of loss-making sales increased slightly from 2.3 per cent in June in Wollongong to 2.4 per cent in the three months to September, but we're still talking about a very low volume of loss-making sales overall."
In the September quarter in the Kiama LGA, 98.5 per cent of all re-sales turned a gross profit. Owners typically retained their homes for 7.7 years and earned an average gross profit of $495,000.
This is compared to the June quarter, when 100 per cent of re-sales in Kiama turned a gross profit, with a median hold period of 12.1 years and a median profit of $701,500.
Ms Owen said she believed for Kiama that "there's not enough to tell about the broader market trend from such a small proportion of loss-making sales".
"If anything selling conditions across the region would be improving at a high level from the previous quarter, as dwelling values increased 2.9 per cent through the September quarter (this was off the back of a 0.3 per cent rise in the three months to June)," she said.
"When you are going off such a low proportion of loss-making sales, it could be an anomaly with the sales happening, with loss coming down to the individual circumstance.
"A reduction in the median gains from re-sale could reflect a change in the kinds of properties sold, a change in the hold period of sales, as well as slower growth in the market than what was observed through 2021 and early 2022."
Overall, Ms Owen said the data suggested that it's "been another good year for re-sellers in the Illawarra".
"There was a slight uplift in the loss-making re-sale rate from 1.6 per cent in the September quarter of last year, to 2.3 per cent in the September quarter 2023, but sellers who did make a loss from re-sale held for a relatively short period of time," she said.
"The median hold period for loss-making sales in the region was just 1.7 years, and the increase the loss-making sale rate coincided with a slight year-on-year decline in home values of -0.2 per cent across the region.
"The fact that close to 98 per cent of re-sales made a nominal gain speaks to the fact that longer term sellers have benefited from capital gains across the market, whereas those who have to sell within a shorter period are generally more vulnerable to short-term market fluctuations.
"Given the market value of the Illawarra has increased 37.4 per cent since the onset of the pandemic in March 2020, anyone who purchased beforehand is not only set to make a profit, but will be making strong gains that could go a long way towards their next purchase, especially if downsizing."
Readers can now subscribe to Australian Community Media's free weekly Illawarra property newsletter, Hot Property Illawarra.
The newsletter will keep you informed about what's currently making headlines in the region's real estate market and beyond.
To sign up, click here, scroll down, enter your details, click the 'property' box and then click 'subscribe'.