Coastal areas top most profitable regions to sell a home

137 views 2021-12-27 15:47:46

Manly, on Sydney’s northern beaches, topped this year’s most profitable area to sell a home, with vendors pocketing a nearly $2 million gain on average, and almost all sales making a profit, data from Suburbtrends reveals.

Sellers in Sydney’s eastern suburbs also had a bumper year, raking in a profit of $1.864 million on average, as demand for coastal and lifestyle locations soared during the pandemic.

Homes in Warringah and Pittwater in the northern beaches also delivered hefty returns, with vendors on average achieving profits of $1.325 million and $1.5 million respectively.

Almost all (98 per cent) of the homes sold in Warringah and Pittwater were profitable, while 96 per cent in the eastern suburbs achieved a profit.

Home sales that delivered the highest average profit were held for 10.3 years on average, although vendors in the eastern suburbs only kept the properties for 8.65 years.

Properties sold for more than $75,000 above the purchase price were deemed profitable, as this adequately covered both selling and purchase costs for the owners, and anything below was considered a loss, said Kent Lardner, director of Suburbtrends.

The result was based on 278,000 property sales in 2021 that could be matched to a prior sale.

“It was a year of very high profits for most home sellers, with Sydney’s northern beaches and eastern suburbs generating average gains of well over $1 million for the average seller,” said Mr Lardner.

“The findings highlighted the massive gains made in the premium coastal locations and also a number of regions benefiting from the ongoing exodus.

“The key driver for the largest gains appear to be the right asset class, [a house] in a premium coastal suburb.”

Amanda Gould, buyer’s agent and founder of HighSpec Properties, said demand for houses on the northern beaches has exploded during the pandemic.

“Buyer demand was the strongest demand I’ve seen in the 11 years that I’ve been buying properties in northern beaches,” she said.

Relative affordability

“At the height of the boom, people were paying between 15 per cent and 20 per cent above the asking price because of low stock, so it’s not a surprise vendors made big profits this year.

“The area offered relative affordability compared to the eastern suburbs and the lower north shore, so people looking for space piled in.”

Manly’s median house price jumped 35 per cent to $3.713 million in the 12 months to September, data from Domain shows. It rocketed by 44 per cent to $2.52 million in Warringah, and climbed by 40.5 per cent to $2.67 million in Pittwater and by 28.4 per cent to $4.3 million in the eastern suburbs.

Ray White chief economist Nerida Conisbee said beachside locations generally performed well this year as people sought out space and lifestyle.

“People wanted to be near the beach so that that trend really held up throughout Australia since the start of the pandemic,” she said.

“We saw that in the strong price growth across Sydney’s beachside suburbs and in Melbourne’s Mornington Peninsula.”

Around 97 per cent of all homes sold in the Mornington Peninsula made profits of $590,000 on average, while an average vendor in Richmond Valley achieved a gain of $645,000.

Baulkham Hills in Sydney’s north-west and Leichhardt in the inner west also made it to the most profitable areas for vendors, with an average sale gaining more than $1 million.

By contrast, remote locations or areas relying on just one or two industries posted the most losses, the report found.

An average home sale in South Hedland and Nickol in the West Australian outback faced $253,000 and $250,000 losses on average, despite the long hold period of eight and 12 years respectively.

Vendors in Kirkwood in Gladstone suffered a $155,000 loss on average, while an average home sale in Roxby Downs, in outback South Australia delivered a $140,250 loss for the vendor.

Looking ahead, Mr Lardner said coastal locations were likely to remain profitable amid ongoing demand.

“I believe the coastal trend continues, especially driven by Sydney or Melbourne asset-rich home owners selling up and cashing in,” he said.

“I think places like Coffs Harbour, Port Stephens and Port Macquarie in NSW will do well, and we’re likely to see strong performance in the Mornington Peninsula and the Surf Coast-Bellarine Peninsula in Victoria.

“I also expect Noosa in particular will have a great 2022.”

This article is from Australian Financial Review, please click the following link for the original article: https://www.afr.com/property/residential/coastal-areas-top-most-profitable-regions-to-sell-a-home-20211222-p59ji3

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