Property Boom Delivers Record Profits, But Widens Gap for First Home Buyers
Australian homeowners are experiencing the most significant resale profits in over a decade, a trend that, while enriching existing owners, is simultaneously pushing aspiring first-time buyers further away from market entry. A comprehensive new report highlights that a staggering majority of property resales across the nation are now yielding substantial gains, a phenomenon driven by long holding periods and a robust property market.
Widespread Profitability Across Capital Cities
Domain’s latest Profit and Loss Report, released this week, reveals a remarkable trend: for the first time in 15 years, over 90% of house resales in every Australian capital city have resulted in a profit. This widespread success is not limited to just houses; nationally, 97.5% of house resales and 88.3% of unit resales in the latter half of 2023 turned a profit.
The report underscores record equity gains for many homeowners. Several capital cities have seen median resale profits soar to new heights. Sydney leads the charge for houses, with sellers pocketing a median gain of $750,000. Brisbane has achieved the highest median profit for units, reaching $325,000. Adelaide and Perth have also posted all-time highs for both houses and units, with Adelaide recording $539,500 for houses and $290,000 for units, while Perth saw $528,000 for houses and $226,050 for units.
Sydney’s annual median profits have climbed by an impressive 11.1%. In the city’s prestigious Eastern Suburbs, the typical seller has walked away with a remarkable $2.77 million profit.
Long Holding Periods Fuel Equity Accumulation
Dr. Nicola Powell, Domain’s Chief of Research and Economics, attributes these substantial equity gains to homeowners staying in their properties for extended periods. “As homeowners stay put for longer, they are seeing their equity build up over multiple price cycles,” Dr. Powell explained. This sustained presence in the market allows owners to benefit from successive property value increases.
This widespread profitability has provided many Australians with a strong financial safety net. It offers a buffer against economic pressures such as rising interest rates and inflation, and crucially, it enables many to “climb the property ladder” by upgrading to larger or more desirable homes.
Middle-Ring Suburbs Join the Profitability Surge
The surge in property profits is not confined to premium locations. Domain’s findings indicate that middle-ring family suburbs, traditionally situated below the most exclusive price points, are also experiencing near-universal profitability. This suggests that the equity boom is reaching a broader segment of the housing market.
Brisbane and Perth have demonstrated the strongest momentum in this regard, each reporting an exceptional 99.5% of house resales yielding a profit. Median profits in these cities have also seen significant annual increases, with Brisbane up by 22.9% and Perth by 25.7%. Adelaide has followed closely, with 98.2% of house resales proving profitable and median profits rising by 15.5% annually.
Dr. Powell notes that these record profits in mid-sized capitals are a reflection of “steady growth and equity accumulation” observed since 2021. These trends have been further bolstered by robust migration flows and a constrained supply of available properties, creating a favourable environment for existing owners.
Capitals Lagging the National Trend
However, not all capital cities have kept pace with the national boom. Melbourne, Canberra, Hobart, and Darwin have lagged behind the broader trend. While profitability remains high in these cities, the median gains are now lower than they were four years ago. Notably, Canberra was the sole capital city to record an annual decline in the proportion of profit-making resales, a trend linked to softer price growth in the territory.
Equity Boom Deepens the Generational Divide
The substantial financial windfalls enjoyed by existing homeowners are simultaneously creating significant hurdles for those looking to enter the property market for the first time. The sheer magnitude of these profits is widening the chasm between established owners and aspiring buyers.
“The sheer size of these profits is creating a wider gap between established owners and those attempting to enter the market, making it increasingly difficult for younger Australians to buy property without the support of intergenerational wealth,” Dr. Powell stated.
The barrier to entry is no longer solely determined by individual savings. Instead, the ability to purchase a property is increasingly influenced by the existing equity held within a family.
Deposit Requirements for Aspiring Homeowners:
To illustrate the challenge, consider the deposit required for an average Sydney house in 2026. An aspiring homeowner would need to save approximately $319,800 to avoid paying Lenders Mortgage Insurance (LMI). For those looking to buy in Brisbane, the required deposit for an average house stands at $230,000, representing 20% of the property’s value.
The current property market dynamics present a dual reality: a thriving market for existing owners, but a progressively more challenging landscape for those dreaming of their first home. This widening gap underscores the growing importance of financial support beyond individual earnings for a significant portion of the population seeking to enter the housing market.
