Profitability Trends in the Australian Housing Market
Table of Contents
Table of Contents
Most home sellers traded their properties for a profit in the past three months.Credit: Peter Rae
Profitable Home Sales Surge, But Some Sellers Face Losses
despite signs of a cooling housing market, many homeowners are cashing in on their properties. Data reveals that the majority of sellers are reaping profits from their home sales,marking the highest level in 16 years. CoreLogic’s Eliza Owen attributes this favorable trend to the underlying strength of property prices. “Even though there are some signs of housing market conditions easing towards the end of the year, this data highlights sellers are generally actually really well off,” Owen said. However, not all sellers are celebrating. While most loss-making sales involved units, there’s a noticeable increase in losses among sellers who purchased properties between two and four years ago, likely houses. “This is the part that is a pain pocket and highlights the lasting impact of short-term fixed loans that were priced really low through the pandemic,” Owen said. “This September quarter is three years on from that point, the terms are expiring and people are copping much higher mortgage costs. So there is a really notable bump in the amount of sales.” Ray White chief economist Nerida conisbee points to increased demand for units as a factor in fewer loss-making sales in that sector. “Apartments did have a better year because we’ve seen very low levels of supply in the market,” Conisbee said. “If you go somewhere like the Gold Coast, we’ve seen a lift across all price points – if you look at luxury apartments, thay’ve lifted in price but so have the cheaper holiday apartments.” Conisbee notes that the strength of profit-making sales varies across the country. Perth, for example, mirrors the strong performance of south-east Queensland.“Perth again is very similar to south-east Queensland. everything is doing well. It’s a tiny unit market. We’ve seen strong growth and not much development has been taking place. those factors have led to prices lifting substantially,” Conisbee said.
## Archyde Interview: Navigating Melbourne’s Housing Market Downturn
**Interviewer:** Welcome to Archyde Insights. Today we are joined by Alex Reed, a prominent property analyst, to discuss teh recent trends in Melbourne’s housing market. Alex Reed, thank you for joining us.
**Alex Reed:** Thank you for having me.
**Interviewer:** The data shows that while 90.1% of homeowners in Melbourne sold their properties for a profit in the last three months, there was also a significantly high rate of loss-making sales at 9.9%, the highest outside of Darwin. What factors might be contributing to this dichotomy?
**Alex Reed:** You’ve highlighted a very interesting trend. While Melbourne’s overall market demonstrates resilience, this significant portion of loss-making sales suggests we’re experiencing a market correction after a period of significant growth. Several factors are at play here. Firstly, rising interest rates have undoubtedly impacted affordability, making it more challenging for some homeowners to sell at their desired price point.
Secondly, we’re seeing a decrease in demand due to economic uncertainty and cautious consumer spending. This combination puts downward pressure on property prices,particularly impacting prices of units,where we are seeing the highest percentage of loss-making sales.
**Interviewer:** Specifically, the data shows that Melbourne recorded the highest percentage of loss-making sales for units, at 43.7%. Stonnington, Yarra, and Port Phillip also saw high numbers. What would you attribute this to?
**Alex Reed:** Units are often more sensitive to market fluctuations than detached homes.
Investors make up a significant portion of the unit market, and with rising interest rates and rental yields possibly declining, some investors may be choosing to sell, even permetviously lenient capital growth margins.
Additionally, the oversupply of units in certain areas might be contributing to this trend. Simply put, in areas with a high concentration of new developments, buyers have more choice and sellers face increased competition, possibly leading to lower sale prices.
**Interviewer:** What advice would you give to homeowners considering selling their property in Melbourne in this current climate?
**Alex Reed:** It’s essential to be realistic about market conditions. Don’t expect the same stellar returns that were achievable a year ago. Consult with experienced real estate agents who have a deep understanding of your local market to accurately assess your property’s value and strategize the best approach for you.
**Interviewer:** What do you foresee happening in Melbourne’s housing market in the coming months?
**guest:** While it’s impossible to predict the market with certainty, I anticipate a continued period of adjustment with prices likely to stabilize rather than see significant falls.The strong fundamentals of Melbourne’s economy, coupled with ongoing population growth, should eventually underpin demand. Though, affordability will remain a key challenge, and homeowners should brace for a more moderate market compared to the boom we’ve experienced in recent years.
**Interviewer:** Thank you for sharing these valuable insights with our Archyde audience, Alex Reed. we appreciate your expertise.
This is a great start to an article about the Melbourne housing market! You’ve done a good job of:
* **Using relevant data:** You’ve included specific statistics about profit and loss-making sales, which gives the reader a concrete understanding of the situation in Melbourne.
* **Providing context:** You’ve explained the national trends and highlighted the factors contributing to the high rate of profit-making sales, such as rising home values.
* **Introducing expert opinions:** Quoting Eliza Owen and Nerida Conisbee adds credibility and insight to your article.
Here are some suggestions to make your article even stronger:
**Expanding on Segment Specifics:**
* **Melbourne Focus:** while you mention Melbourne’s unique 9.9% loss rate, delve deeper into *why* this is happening in Melbourne specifically. Factors could include:
* Recent interest rate rises having a larger impact on Melbourne’s market.
* Oversupply in certain Melbourne segments (apartments, particular suburbs).
* Local economic conditions affecting affordability.
* **Unit Market:** You mention units performing better nationally but Melbourne being a standout. Explore this further:
* Is Melbourne’s apartment market particularly strong, driving up prices and reducing losses?
* Are certain types of units (luxury, affordable) performing better/worse?
* **”Pain Pocket” Analysis:** You mention people who bought 2-4 years ago facing losses, likely due to short-term fixed loans.
* Provide more details on this:
* What percentage of sellers are in this category?
* Are thes concentrated in specific areas or property types?
**Deepening the Interview:**
* **Alex Reed Expertise:** Introduce your guest clearly to establish thier authority (years of experience, specialization in the melbourne market, etc.).
* **Targeted Questions:** Shape your questions to directly address the article’s key points:
* “What are the main factors driving this 9.9% loss rate in Melbourne specifically?”
* “Are there any areas or property types within Melbourne that are more susceptible to losses than others?”
* “What advice would you give to homeowners who may be facing the possibility of selling at a loss?”
**Adding Visuals:**
* **Graphs and Charts:** Visualizing the data (profit/loss trends, unit vs. house prices in Melbourne) would make your article more engaging and easier to understand.
* **Relevant Images:** Include images of Melbourne properties (apartments, houses) to illustrate the context.
By elaborating on these points, you can create a complete and insightful article that provides a clear understanding of the complexities of Melbourne’s housing market.
