Revealed: Australia's most profitable locations

"You can't go wrong with real estate". It's an expression we've all heard, and to be fair, most properties re-sold in the first quarter of this year have notched up a profit for the seller. The big surprise is that plenty of affordable locations have trumped blue-chip addresses as a sure thing for capital gains. But there are also locations where capital gains have been thin on the ground. Let's take a look at the locations that have delivered big profits, and those where sellers are nursing a loss.

Profit-making sales at highest in 14 years

It's remarkable that housing values nationally rose 8% over the past financial year, despite 13 rate hikes in two years and a cost-of-living crunch. This price growth has been a big driver of profits on resale.

According to CoreLogic's latest Pain & Gain report, 94.3% of the 85,000 homes re-sold in the first quarter of 2024, made a profit for their owners. It's the highest rate of profit-making sales since 2010. And we're talking about decent gains too, with the median profit of $265,000 eclipsing the median loss of $40,000.

Brisbane and Adelaide topped the leaderboard, with 98.4% of homes re-sold for a profit.  At the other end of the spectrum, 28.7% of Darwin properties were sold for less than the owner paid. So much for the maxim that you never lose money on property. CoreLogic explains the situation, saying values in Darwin continue to sit below the highs recorded a decade ago in May 2014, around the time of the previous mining boom.

Location isn't the only factor that shapes the likelihood of selling for a profit. It can also depend on the type of property. As the table below shows, across almost every capital city (with the possible exception of Hobart) houses were more likely to sell for a profit than apartments. The gain on sale is also a lot bigger. The median nominal profit among houses re-sold in the March quarter was $320,000, compared to $172,500 for units.

It goes to show that apartments can have the edge for affordability at purchase time, but when it comes to price growth, houses tend to win out.

Proportion of total resales at a loss or gain

Source: CoreLogic. Figures based on March quarter 2024.

Australia's most profitable locations

All this begs the question, which neighbourhoods were the most profitable? The answer can be surprising. In Sydney, the prestigious Hunters Hill local government area (LGA) scored 100% for profits on resale. But plenty of far more affordable locations including Camden, the Blue Mountains and Campbelltown saw at least 98% of homes on-sold for a profit.

Most profitable locations for home sales by LGA region

Source: CoreLogic. Figures based on March quarter 2024.

Brisbane, Adelaide and Perth all notched up lengthy lists of profit-making locations. Logan (QLD), Adelaide Plains (SA) and Cottesloe (WA) each racked up a perfect score of 100% of homes re-sold for a gain.

Neighbourhoods that dominated loss-making resales

For some property sellers, the March quarter dished up disappointing results. The table below reveals those locations where a sale was most likely to result in a loss. It's worth pointing out that in each of these locations, the vast majority of properties sold for a profit. That said, there is no one-size-fits-all explanation as to why some properties failed to make a profit.

In Sydney, LGAs like Parramatta where there is a high volume of units relative to houses, copped the biggest proportion of loss-making sales. It's a pattern repeated across CBD markets in Brisbane, Adelaide, Perth and Darwin.

In other locations, CoreLogic says the loss-making locations were those where properties were held for short periods. As a guide, the median holding period for loss-making sales in Hobart was just two years.

Least profitable locations for home sales by LGA region

Source: CoreLogic. Figures based on March quarter 2024.

When to cash in

Clearly, along with location and the type of property (house versus unit), another key factor that can shape whether a place sells for a profit is the length of time the property is held. Looking at the chart below it's clear that property rewards patience. 

The most common holding period for homes re-sold in the March quarter was two to four years, which resulted in a median gain of around $180,000. This gain increased in line with the holding period. For those prepared to wait 30 years before selling a property, the median nominal gain was an impressive $780,000.

Median nominal return from resales by hold period (years)

Source: CoreLogic. Figures based on March quarter 2024.

Of course, 30 years is a long time to hang onto any asset. Even so, these results show that time in the market, rather than trying to time the market, goes a long way to maximising returns for most resales.

This is something to bear in mind when buying as an investor. In previous editions of the Pain & Gain report, CoreLogic has found investors are more likely to make a loss on property than owner-occupiers, and it's often because investors tend to sell out sooner while homeowners hold onto their place for a lot longer.