Home prices have begun to fall in much of Sydney but the drops have yet to erode the substantial gains property owners have made on their properties over years of ownership.
New data from realestate.com.au has revealed Australia’s most profitable resale regions over the past 12 months to April, with NSW homeowners often topping the list.
A typical homeowner could be sitting on around $400,000 in profit in NSW, with a median profit of $369,000 and 94.4 per cent of resales profitable over the past year.
Sydney’s Northern Beaches SA4 saw the highest median profit nationally with a median profit of $810,000 over the year to April and 96.3 per cent of resales profitable.
Some of Sydney’s premium suburbs recorded the highest median profits over the past year. Picture: NCA NewsWire / Gaye Gerard
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The Eastern Suburbs followed with a median resale profit of $779,000 and 96.2 per cent of sales profitable.
The Baulkham Hills and Hawkesbury region was not far behind with a $750,000 median profit, and 94.8 per cent profitable.
While the Sutherland Shire also made the national top 10, with a median profit of $527,000 and 97.7 per cent of sales profitable.
Multiple Sydney regions also featured in the greatest national estimated total resale profit over the year.
This included The Central Coast ($2.24bn), Inner South West ($2.35bn), Northern Beaches ($2.73bn) and Eastern Suburbs ($3.16bn) – rising to $4.05bn in North Sydney and Hornsby.
REA Senior Economic Analyst Megan Lieu said the data spotlights Sydney’s premium suburbs driving a higher median profit.
Some of Sydney’s premium suburbs recorded the highest median profits over the past year. Picture: NCA NewsWire / Gaye Gerard
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“Areas like the Eastern Suburbs and Northern Beaches in Sydney have some of most expensive properties in the country as they offer lifestyle and location advantages which many Australians value,” she said.
“Median profits on sales tend to be higher as a result.”
Almost 95 per cent of properties in NSW were profitable (94.4%) when they were resold over the year.
Ms Lieu said while higher interest rates are likely to soften demand from buyers across the country, the affect on supply is unlikely to be as pronounced due to these strong equity gains. “Almost all property owners with a loan are currently in positive equity, meaning they have a buffer against an increase in mortgage repayments,” she said.
“This allows them to take actions such as lowering their expenses, refinancing their loans or depending more on their savings to offset these rising servicing costs.
Megan Lieu
“With a large proportion of owners in this position, the number of forced sales is likely to be low.
“They are buffered against interest rate hikes and also with the negative gearing changes in the CGT changes recently.”
Ms Lieu added although price growth is expected to slow further and decline in some regions as a result of weakening demand, these equity buffers will limit cases of distressed selling and support the gradual easing in prices, reducing the likelihood of abrupt and destabilising price falls.
Ray White Chief Economist Nerida Conisbee said the top Sydney suburbs for profit including the Northern Beaches and Eastern Suburbs already have significantly high median prices.
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Long-term homeowners are still sitting on large amounts of real estate wealth.
“We’ve had three interest rate increases, we’ve got rising unemployment, there’s war in the Middle East and then of course they’ve had the budget, which will pull investors particularly away from buying property,” she said.
“It is likely that prices will either stagnate, see very little growth and in some areas decline.
“For these suburbs though, they’re not suburbs that we do see a lot of investor activity.
“So it’s quite possible they’ll still be positive in terms of profit as a result of the budget, but what’s really working against them at the moment is the fact that interest rates have gone up three times this year.”
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Nerida Conisbee
For sellers, Ms Conisbee said there are still eager buyers out there despite all the economic uncertainty.
“The market has obviously hasn’t shut down,” she said.
“We know owner-occupiers are still active and even though there’s a lot of negativity out there it’s certainly not the case that the market is not functioning.
“There continues to be demand.”
Median profit by SA4 NSW
SA4 Profitable Median profit ($)
Sydney – Northern Beaches 96.3% $810,000
Sydney – Eastern Suburbs 96.2% $779,000
Sydney – Baulkham Hills and Hawkesbury 94.8% $750,000
Sydney – Sutherland 97.7% $527,000
Central Coast 97.8% $473,500
Sydney – Outer South West 98.4% $470,000
Sydney – North Sydney and Hornsby 92.8% $455,000
Richmond – Tweed 95.7% $453,000
Sydney – Outer West and Blue Mountains 98.1% $447,000
Newcastle and Lake Macquarie 98.3% $437,000
Southern Highlands and Shoalhaven 94.6% $426,000
Sydney – South West 94.9% $422,000
Sydney – Blacktown 94.0% $405,000
Illawarra 97.3% $394,000
Sydney – Inner West 90.9% $392,500
Hunter Valley exc Newcastle 98.6% $365,000
Coffs Harbour – Grafton 97.2% $357,000
Sydney – Inner South West 94.6% $347,000
Mid North Coast 96.6% $330,000
Capital Region 95.7% $300,000
Central West 96.4% $270,000
Sydney – City and Inner South 87.3% $270,000
Riverina 98.5% $268,000
Murray 98.1% $257,000
Sydney – Ryde 82.6% $255,000
New England and North West 97.3% $230,000
Far West and Orana 97.8% $198,000
Sydney – Parramatta 82.0% $166,000
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