Proportion of sellers making a profit is increasing

The latest version of RP Data’s Pain and Gain report showed that as we get closer to a new peak in dwelling values the proportion of sellers making a profit on sale is increasing.

Interestingly some of the best outcomes have been recorded in suburbs around 20 kilometres away from the Melbourne CBD.

The report is useful for property investors, small or large, because it looks only at homes that already have an owner and whose sale price is therefore set by the market. Other market data, median prices for instance, mingles the new sales with prices set by the developers and those sold by individuals.

The report showed that only 7.7% of Melbourne homes re-sold in the September quarter of 2013 incurred a loss for their owners. This was lower than the 8.2% recorded in the June quarter this year and 8.3% in the 2011 June quarter.

Of course the longer the home was owned the more likely the owner was to see a profit on sale. The highest proportion of owners selling for more than double what they paid had owned their homes for between 10 and 15 years.

In overall terms the highest overall profit was recorded in more expensive areas with sellers in Boroondara recording $231 million in profit in three months. Whitehorse ranked second with $159 million in profit and Monash third with $136 million.

Despite the very high profits recorded in those inner and middle eastern municipalities it was sellers in Knox that probably had the best outcome with only 2% recording a loss. Those losses totalled only $360,000, less than the value of one house. Second on the list was Manningham where 3.9% of sellers recorded a loss and third was Maroondah with 4.3%.

Robert Larocca is Victorian housing market specialist for RP Data.