Australian House Sellers Reaping Huge Profits: Houses More Than Twice as Profitable as Units

Discover why Australian house sellers are making double the profit of unit sellers in the current property market. Profit margins revealed in CoreLogic figures.

Australian house sellers are reaping the rewards of the current Australia real estate market, with profits from house sales more than doubling those from unit sales. According to CoreLogic figures, homeowners who sold their properties in the March quarter made a median paper profit of $388,500 for houses across the capital cities, compared to $165,000 for units. The disparity was most pronounced in Sydney, where house sellers made $600,000 in profit compared to $200,000 for unit sellers. Similar gaps were seen in Melbourne, the ACT, Brisbane, and Perth.

The trend of houses outperforming units in terms of profits can be attributed to several factors. Over the past decade, Australian house prices have risen significantly faster than apartment prices, with houses experiencing an 84.9% increase compared to 41.1% for units. Houses typically have a larger land component and offer potential for development, making them more attractive to buyers. In contrast, the oversupply of units resulting from a development boom in the 2010s has dampened capital gains for unit sellers.

The COVID-19 pandemic further accelerated the demand for houses as households sought more living space. Owner-occupiers gravitated towards outer suburban and regional markets where detached houses are more prevalent, while investors remained cautious due to closed international borders. This shift in buyer preferences has widened the gap between house owners and unit owners, highlighting the disparities in the Australia housing market.

While the surge in house profits may benefit some sellers, it also underscores the challenges faced by those looking to enter the Australia real estate market. The scarcity of detached houses, coupled with the abundance of units, has made it increasingly difficult for buyers to find suitable housing. Families, in particular, prefer houses with more space and amenities, making units less desirable for this demographic.

In order to build equity in the current Australia real estate market, unit buyers are advised to focus on higher value areas with strong land components. Factors such as natural light, a good location, and a well-maintained property can enhance the value of a unit. Renovations may also boost returns, especially for older-style units that have not experienced significant growth.

Overall, the housing market in Australia reflects a growing divide between house owners and unit owners, with houses commanding higher profits and greater demand. As the market continues to evolve, it is essential for buyers to consider their preferences and long-term goals when making property decisions.