For many Australians, and especially first homebuyers, the belief that purchasing property is a great way to build your wealth is foundational.
While we all realise real estate has its ebbs and flows – like any other market – society has taught us that property is a solid investment for our futures.
It might not have the get-rich-quick lure of stocks, but it avoids the volatility and risk of those investments.
So where is the evidence supporting the contention that property is a wealth builder?
The latest report from industry researcher CoreLogic highlights the power of property as an investment.
Its latest “Pain & Gain” report analysed 95,300 resales between September and December of last year and found a median gain of $306,000 for each deal.
The report, launched in the mid-90s, has never seen owners make so much money from their property sales.
The median hold period was 9.2 years across all resales, including 9.3 years for profit-making resales.
The result came at a time when property deals were flat and buyers were disappointed the Reserve Bank of Australia had failed to deliver anticipated interest rate cuts.
“Given the strong relationship between capital growth and the rate of profitability, and expected further easing in the cash rate this year, the rate of profitability from home resales will likely recover in 2025,” it said.
Total nominal gains from resale were $35.6 billion, up from $35 billion in the previous quarter.
Brisbane recorded the most profit-making resales with almost all resales making a nominal gain (99.6%). Adelaide was the second (99.1%) and Perth third (97.4%).
Sydney (90%) recorded the third-lowest rate of profit-making sales ahead of Darwin and Melbourne.
Of the 5.2% of resales that made a loss, the median loss was $45,000, up from $40,000 in the previous quarter, and above the five-year average of $39,180.
Sydney and Melbourne accounted for 60.6% of loss-making resales, despite only accounting for 34.2% of total resales in the quarter. The majority of loss-making deals were for apartments.
Only 3% of houses sold for less than the previous price.