Eastern Suburbs Property: Why The Vast Majority Of Sellers Make A Profit

The strength of the eastern suburbs for capital growth is well known among Sydney real estate aficionados.

During the past boom, already-expensive properties in this area have been setting new records and maintaining their position as a coveted asset. Sellers have been doing well, with new research showing that of all those who sold in the June quarter 99% made a profit.

The CoreLogic Pain & Gain report found the best result was in Woollahra, with 99.5% of sellers making money from the transaction.

This was closely followed by Waverley, with 99.1%, and Randwick, with 98.9%. These three eastern suburbs council areas posted some of the strongest results in Sydney over June. Nationally, 9.5% of dwellings sold over the same time period went for less than what the owner initially paid for them.

The amount of money made by sellers in the east has also been substantial. The report found sellers achieved a median profit of $505,000 in Woollahra, $540,000 in Waverley and $467,000 in Randwick. These homeowners were, on average, holding onto their properties from 8.2 to 9.5 years. Generally, family homes in this part of Sydney are very tightly held.

This means sellers are more likely to sell for a price gain as they ride through the growth cycles and the troughs, and to make up their transaction costs, compared to investors who flip homes more quickly.

The fundamentals driving the eastern suburbs

In the real estate world, it’s all about supply and demand. And there’s certainly an abundance of demand for eastern suburbs property. Families are queuing up come auction day at the moment to fight for their new homes, while apartments are also being snapped up for prices well above reserve.

We’re seeing downsizers, upgraders and movers in general, all within the same markets and after the same homes. This has been exacerbated by a significant lack of stock available to choose from over 2016.

This new shortage has clearly been part of what has kept the market soaring after four years of growth, with low interest rates fuelling buyer interests but sellers failing to list at rates to satiate buyer demand.

This means that sellers who are in the market right now are doing very well with their selling prices and reaping the benefits of a rare real estate market. Last year, stock levels were much higher and we’re still seeing prices adjust higher as a result of this new normal. High auction clearance rates, of 80% plus on some measures in the eastern suburbs, are a clear sign of this stock shortage.

The eastern suburbs also lagged behind some other regions, such as the inner west, during the last couple of boom-time price growth years. Clearly, some of what is happening now is catch up – and it’s all a function of stock levels.

We also have to keep in mind that the experience of the Global Financial Crisis is still raw in the minds of many people in the east. This has made some wary of investing, but we’re starting to see confidence re-growing in discerning $3 million-plus property buyers.

Download our 2018/2019
Eastern Suburbs Market Report

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