Perth property market: Profit and loss data shows sellers are walking away with astonishing windfalls

An extraordinary 98 per cent of homes sold in the Perth metro area last quarter made a profit, new data due to be released on Wednesday has shown. According to a report by property research firm Cotality, sellers made an average of $324,00 more than their original purchase price from June to August with a median ownership of nine years. It is a stark contrast to just five years ago, when roughly 50 per cent of homes were being sold at a gain. The data, obtained by The West Australian, also pinpointed the Perth suburbs where houses are most likely to make a profit, with every single residential property sold in both Cottesloe and East Fremantle resulting in a gain. Those putting their homes on the market in Cottesloe pocketed an average of a $694,750 with a median hold period of 13 years, which was the third-highest of any local government area in the entire nation. East Fremantle houses made an average of $444,000, with Joondalup (99.3 per cent), Melville (98.8 per cent) and Mundaring (98.5) also among the suburbs most likely to see a profit, with median gains of between $440,000 to $520,000. Cotality said Perth’s remarkable turnaround in property profits coincided with an almost 80 per cent increase in home values over the past five years, with the profits are set to continue. “The rate of profitability is expected to remain high, as recent rate cuts have delivered yet another uplift in the rate of capital growth to 3.1 per cent in the three months to August,” said the report. But had recent sellers originally purchased their homes 11.1 years ago, there is a slightly increased chance they would have been among the 2 per cent of properties which sold in Perth last quarter for less than their original sales value. While the Cotality research does not provide a comprehensive list of the exact loss per area, it highlights significant losses include a median $80,000 loss in Stirling, which includes North Beach, Nollamara and Osborne Park. There were also significant median losses in Swan, Wanneroo and Gosnells though only for 1.6 to 2.3 per cent of sellers. The median losses ranged between $72,000 and $46,000. Property expert Gavin Hegney said buyers should not be alarmed by the losses in some areas. “People want to buy in areas where there are the biggest gains but often the biggest opportunity is in the areas where there has been the biggest pain,” he said. Perth had the most significant proportion of loss-making properties, at 13.3 per cent of all sales in the last quarter, and a median $40,000. Mr Hegney said these sales likely involved apartments, which sold more than a decade ago amid strong marketing campaigns and hopes for a new form of vibrant inner city living. Ample new supply had met demand, undermining sales pressure. The Cotality research shows houses are more likely to make a profit, with 98.7 per cent in Perth selling at a gain last quarter. Units had a 95.9 per cent profit run. In regional WA, 94.2 per cent of houses and 87.2 per cent of units sold at a profit. Across all profit-making resales nationally, the median nominal gain was $315,000 the June quarter, which was a record high, up from $305,000 in the previous quarter and the decade average of$250,000. The median loss nationally was $42,125.