Great News for Brokers: Property Resales are at a 14-year High

Property Resales are at a 14-Year High

When property resale profit is high, this is good news for Aussie brokers. When this profit has been consistent over a 14-year period, that’s even better and reinforces that the markets is ripe for investors, property flippers and homeowners looking to make a move.

In a recent article by Mortgage Business, they revealed the latest “Pain & Gain” report statistics that show 85,000 property resales were made in the first quarter of 2024. As broking aggregation professionals, we know the value of educating brokers and facilitating referrals. The following article will showcase an analysis of Mortgage Business’ article, the key statistics presented and share how its information can be leveraged by brokers around Australia.

Property Resale Profitability at a 14-Year High

Discussed in the article, property resales have achieved their highest rate of profitability since 2010. An impressive 94.3% of transactions recorded a nominal gain during this period, driven by rising home prices that have counterbalanced economic challenges and high home loan rates (a symptom of the continual interest rate rises).

For instance, in Sydney, the consistent increase in home values has resulted in significant profits for homeowners. Brokers can leverage this data to reassure clients about the profitability of investing in the property market, emphasising the financial stability such investments can offer.

Key Trends in the Australian Property Market

  1. Rising Home Values: Home values rose by 1.7% over the first quarter of 2024. This increase supports higher property resale profitability, marking the fourth consecutive quarter of rising profit-making sales. This trend indicates a resilient property market, offering brokers a compelling narrative to share with potential buyers and sellers.
  2. Profit and Loss Statistics: The estimated combined value of nominal gains from property resales was $28.6 billion in the March quarter of 2024, down slightly from $30.6 billion in the previous quarter. However, this slight decrease is attributed to seasonal declines rather than market instability. Nominal losses from property resales were $278 million, down from $302 million in December 2023.
  3. Australian City-Specific Insights: Melbourne recorded the highest rate of loss-making sales at 9.2%, up from 8.9% in the previous quarter. Conversely, Adelaide and Brisbane reported the most profitable outcomes, with loss-making sales at only 1.6% of resales. Perth demonstrated a remarkable turnaround, with loss-making sales declining to 6.4% from 43.8% in June 2020. This improvement highlights Perth as an emerging hotspot for profitable property investments.

Strategic Recommendations for Mortgage Brokers

The above statistics are quite encouraging for mortgage brokers, and from this information multiple strategies and ideas can be demonstrated:

1. Client Education

Use the data on high resale property profitability to assure clients of the favourable market conditions. Highlight examples from cities like Sydney and Brisbane where property values have consistently risen, providing concrete evidence of profitable opportunities in these key cities.

2. Optimal Timing Advice for Transactions

 The “time to buy” sentiment cannot be understated to your clients. For buyers, now is a strategic time to enter the market before prices rise further. For sellers and resellers, the high profitability rates make this quarter the perfect time to consider selling their investment.

3. Tailor your Advice Using Regional Insights

Provide location-specific guidance for the following areas:

  1. Melbourne: Caution clients about the higher rate of loss-making sales and suggest risk mitigation strategies.
  2. Adelaide and Brisbane: These areas can be promoted as prime markets for investment, given their high profitability rates.
  3. Perth: As a mortgage broker, you can highlight the significance of a huge reduction in declining market sales, an improvement of 37.4% since 2020

4. Utilise Local Market Knowledge

While national trends provide a fantastic insight and broader perspective, local market nuances are always crucial for buyers looking local. For clients in New South Wales, focus on state-specific data to offer a more tailored and relevant advisory service.

5. Address Client Concerns with Data

Use the robust profit and loss statistics to alleviate client concerns about economic instability and high mortgage rates. Demonstrate how rising home values can counterbalance these challenges, ensuring financial stability.

6. Focus on Long-Term Investment Strategies

Advise clients to adopt a long-term perspective on property investments. Highlight the potential for sustained profitability and the benefits of holding properties through fluctuating market conditions.

Addressed for Success

The property resale market in Australia presents significant opportunities for mortgage brokers to enhance their advisory services. By staying informed and remaining up to date with the latest property market trends and leveraging city-specific insights, mortgage brokers can provide clients with valuable, data-driven guidance. Vision Aggregation is committed to supporting brokers with the knowledge and resources, like this article, that are needed to navigate Australia’s dynamic market, ensuring success for both mortgage brokers and their clients.

Contact us today to find out how we, as a leading aggregator, are committed to providing you with the support you need to ensure you, your business, and your clients, succeed in every way