Chapter 1: What are the recent trends in property profits across Australia?
It's the Real Estate Podcast across every state, city and town of Australia. And welcome to another episode of the Real Estate Podcast available on iHeartRadio every morning and also on Spotify and Apple and wherever you get your podcasts from. Another Monday has turned up. Yes, here we go again, a new week.
And if you were out amongst the property deals in the weekend, I hope that that was successful for you. Today is the 22nd day of August for 2022. And coming up this morning, we're going to be discussing property windfalls, just how much money are people making and some of the big landslides of profits over the $1 million mark. And joining us is Paul Ryan from PropTrack very shortly.
And sticking with PropTrack, they reported yesterday an auction smashed its reserve by $385,000. And it has some people saying that homebuyers are no longer fearing interest rate rises.
Chapter 2: How have interest rates affected property sales and buyer behavior?
Multiple homes sold for hundreds of thousands of dollars above reserve on Saturday are as Victoria's auction market recorded a 66% clearance rate and that is from 476 reported results. That's according to a preliminary prop track figures. The house sold in question for $1.74 million. And Fabian Sinelli was the auctioneer who we speak to here on the podcast.
And Fabian says he doesn't think the rates are having an impact right now, which is further evidence of what Fabian only mentioned here last week when he said the same thing. So is this a turning point in the market? We are just as addicted to property as you are. Every weekday morning from 6.30. It's the main centre forecast with propertybuyer.com.au.
Chapter 3: Which suburbs are seeing the highest profits in property sales?
All right, let's check on your weather around Australia. And look at that, a mostly sunny day for you today in Sydney and a high of 23 degrees. Melbourne expecting the rain unfortunately, but your temperature not too bad. 17 is the forecast high. Brisbane, partly cloudy but dry. 21 is your forecast top. And in Perth today, a mostly sunny Monday and your high of 17 degrees.
From first home buyers to property investors and everything in between, every morning on The Real Estate Podcast. It's The Real Estate Podcast across Australia, seven days a week. Well, rapid exceptional price growth over the past two years has seen vendors make small fortunes and in many cases a king's ransom.
Chapter 4: What factors have contributed to the surge in property prices during the pandemic?
I mean, who knew a pandemic would result in the market acting like it was on steroids? It's a market nobody, nobody could have predicted. And even if you've heard somebody say, I knew what the market was going to do, then the line from the castle comes to mind, you're dreaming, mate. So nobody really could have predicted this.
And in this current market, even sellers over recent months are not selling properties at a loss. And a PropTrack report has said that the proportion of recent sales that have resulted in capital loss is one third the rate seen in the two years prior to the pandemic and half the rate seen over the two years of COVID. So let's bring in Paul Ryan. He is the senior economist from PropTrack.
And a very good morning to you, Paul. Welcome to the Real Estate Breakfast podcast.
Chapter 5: How are lifestyle changes influencing property buying decisions?
Thank you very much. And likewise, good morning. So people have been making over $1 million in profit, $900,000, $800,000. Your recent reports looked at a profit breakdown from March of this year to July of this year. So let's start with breaking down some of those areas that really turbocharged a vendor's bank balance. Yeah, absolutely.
So we've looked at people that have sold properties from March to July this year, which is since interest rates started to increase. To look at, you know, who are these sellers? How much profit are they making? How long have they held their properties for?
Chapter 6: What is the performance comparison between houses and units in the current market?
The results were quite striking. So particularly in regions to the north of Sydney, places like Pittwater and Manly and Kuringai, we saw people making the typical seller over that period that includes houses and unit sales was over a million dollars in Pittwater and Manly and $830,000 in the Kuringai region of Sydney.
These regions were kind of typical of that lifestyle shift that we saw at the start of the pandemic. So we saw the northern beaches and north of Sydney, as well as places like the north of New South Wales coast and places like Noosa in Queensland. Partly that's off the back of those big price gains since the pandemic started. But also it's because these regions are really expensive to start with.
So the decrease in yields that have pushed prices up have had a bigger effect in these regions. Yeah, and if you look at places like Shoalhaven, Hawkesbury and Richmond, I mean, these places are not inner suburbs of Sydney. What did that tell you in your reports, apart from the obvious there's been a lot of people moving around? Yeah, absolutely.
Chapter 7: How long do sellers typically hold their properties before selling?
I mean, that's been the overwhelming thing that we've seen since the pandemic started are these big preference shifts among home buyers. So as I said, towards lifestyle locations, beachside places, locations with kind of this like nature amenity, as well as just bigger homes in general.
We've seen the premium for larger homes over smaller homes has increased to kind of the biggest gap that we've seen on record since the pandemics. So people are really valuing both larger homes, things like spaces for home offices have driven a lot of that, as well as bigger yards and just locations that are more appealing in general. And so that's affected markets all across the country.
But in particular, those kind of northern New South Wales, southern highlands, Shoalhaven type regions have definitely been beneficiaries of those trends. Okay, so those are the larger properties. As you say, the home office has really made a significant dent towards those property prices going up. But when you look at the units, they don't fare as well, do they? Yeah.
Chapter 8: What does the future hold for property prices and seller profits?
That's the other side of that same coin since the start of the pandemic is that smaller dwellings and units have performed relatively worse than houses. And it might surprise some people that generally houses and units over recent years have seen pretty similar capital appreciation. But that certainly hasn't been the case since the start of 2020.
We've seen, you know, over the year to July, we've seen houses up 9%. We've seen units up only 4% over the year. So... That's been a big trend throughout the pandemic period is that units have underperformed and that's partly their location. So inner city areas have done relatively poorly compared with peripheral parts of cities and compared with regional parts of the country.
And Paul, what about properties? Because this really featured in your report, it was a bit of a standout. Properties held for six to eight years are overrepresented in recent sales. So tell us a little bit about that aspect of your report.
Yeah, so I think it was interesting to look at this because I think there's a bit of a narrative that since interest rates have increased and lockdowns have ended, a lot of the people that kind of made these tree or sea changes now are selling up and kind of moving back to cities. And that's not what we're seeing in the data at all.
So we're not seeing more people that bought in the past kind of one or two years, people that bought in the pandemic selling now. What we're seeing is the people that have sold over the past five months have generally been people that bought well before the pandemic.
So as you say, five, six, seven, eight years ago, people that have benefited from those big capital appreciation that have increased their equity over that period. And your report showed the typical profit for sellers is $260,000. Now that is twice the level achieved by sellers prior to the pandemic. So tell us what stood out for you in that area. Yes, it's quite remarkable, isn't it?
So sellers, the typical seller, so half of sellers made more than $260,000. And that's twice the level we saw just in the two years before the pandemic. And it's a combination of the really strong price growth we've seen throughout the pandemic. So for instance, 2021 was the third fastest episode of price growth in Australia's history, as well as those longer holding periods.
So we've got sellers now that have had their properties for a bit longer than sellers that were selling in that previous period. And I noticed that you say in your report with prices set to fall over the coming period, the ability for homeowners to sell at a profit will be a key factor in who decides to upgrade or invest in property over the coming period.
So far this year, profits have been strong, you say. It would take significant price falls beyond what you are expecting from here to put any sort of a dent into these results for sellers this year. So sellers are really going to love hearing that from you, Paul. Yeah, absolutely.
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