Home prices continue to rise, regional markets more likely to return a profit

Property prices in Australia continue to grow.

Despite numerous economic headwinds, the Aussie property market held firm last year, with recent CoreLogic data showing the rate of profit making sales in capital cities increased over the September quarter.

According to the research firm, the proportion of profitable sales nation-wide was 88.1% over the period, putting an extra $24.8 billion in the hands of sellers. This was up from 87.2%, or $19.8 billion, in the June 2020 quarter.

However, the number of non-profitable sales also went up in September, with the total value of losses coming in at 1.2 billion, up from $885 million in the previous quarter.

Hobart was the best performing city, continuing a trend that has lasted since March 2018. Meanwhile, Melbourne, which was still reeling from the effects of a prolonged lockdown, was the only capital city to post a decrease in the rate of profitable sales.

CoreLogic Head of Research Australia, Eliza Owen noted that regional areas tended to outperform capital cities, particularly coastal regional markets such as Geelong, Illawarra, and the Sunshine Coast.

“The combined regional Australian market saw the rate of profit making sales increase 150 basis points, to 89.2% in the September quarter, while the rate of profitability across capital city markets expanded 30 basis points, to 87.2%,” she said.

The data also confirmed that the market rewards patience, with properties that were held for longer before resale more likely to return a profit.

“Over the September 2020 quarter, the median hold period of resale events across Australia was approximately 8.5 years. For profit making sales, the median hold period was 9 years, while loss making sales were typically held for 6.7 years,” said Owen.

Will property values continue to rise?

According to Owen, “record low mortgage rates, a faster than expected economic recovery and relatively low cases of COVID-19” are expected to boost profitability over the coming quarters.

That view is shared by the Reserve Bank of Australia, which recently released documents showing it believes property prices could rise by as much as 30% over three years if interest rates remain at their current low levels.

The lift in asset prices is expected to boost consumer activity, particularly for "credit-constrained households” with very little breathing room in their budgets.

But the Bank also acknowledged the risks associated with low interest rates, including looser lending standards, overly optimistic assessments of risk, and an uptick in Australians taking out loans that they may struggle to service.

If investor confidence is restored and construction activity picks up, a potential oversupply of new properties could also place downward pressure on prices.

For more information about mortgage and lending trends, visit our home loan statistics page. And for an idea of where interest rates currently sit, check out our home loan comparison page, or browse the selection below.

Home loan comparisons on Mozo - rates updated daily

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure.
  • placeholder
    Mozo Experts Choice 2021
    Smart Booster Home Loan

    1 Year Discounted Variable Rate, Owner Occupier, Principal & Interest, <80% LVR

    interest rate
    comparison rate
    Initial monthly repayment
    1.99% p.a.variable for 12 months and then 2.48% p.a. variable
    2.47% p.a.
    Go to site
    Details
  • placeholder
    Fixed Rate Loan with Orange Advantage

    Owner Occupiers, Principal & Interest, LVR <80%

    interest rate
    comparison rate
    Initial monthly repayment
    2.04% p.a.
    fixed 3 years
    3.60% p.a.
    Go to site
    Details
  • placeholder
    UHomeLoan

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.85% p.a.
    fixed 3 years
    2.24% p.a.
    Go to site
    Details
  • placeholder
    Mozo Experts Choice 2021
    Variable Home Loan Special

    Owner Occupier, Principal & Interest, LVR <70%

    interest rate
    comparison rate
    Initial monthly repayment
    2.09% p.a. variable
    2.12% p.a.
    Go to site
    Details
  • placeholder
    Mozo Experts Choice 2021
    Celebrate Variable Home Loan

    <60% LVR, Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    2.19% p.a. variable
    2.19% p.a.
    Go to site
    Details

*WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

**Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loans Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.