make a killing toppling luxury homes in Sydney, Melbourne and Brisbane
In Brisbane, the seller of the 98 Malcolm Street home, Hawthorne, cashed in $ 375,000 in capital gains in 12 months after selling the home for $ 2.265 million. The owner of 11 Henry Street in Ascot made a gross profit of $ 700,000 after selling the property after 14 months.
Ben Collier, co-founder of the agency, said property flipping has become more common despite capital gains taxes eating into profits.
“We see it more often now than I remember,” he said. âThis happens virtually at all price points and certainly in all parts of the Eastern Suburbs. This happens because there are fewer options for buyers.
His colleague, Nic Yates, a real estate partner with the agency who focuses on the Lower North Shore, said the number of sellers negotiating within two years of buying has increased over the past six months.
âThe sellers are cashing in because the market is moving so fast,â he said.
âIn the past, people were deterred by the large capital gains they had to pay if they sold in less than a year, but if they made more than a million dollars on a sale, pay around $ 200. $ 000 in capital gains tax would be worth it for them.
Mr Yates said that unlike in the past, when sellers renovated properties before putting them back on the market, homes are now sold intact to take advantage of rapidly rising prices.
“I know of at least seven properties that have been returned to Mosman in the past few months and six of them were not renovated,” he said.
âBuyers aren’t picky these days because prices move so aggressively. “
Eliza Owen, head of research at CoreLogic Australia, said that longer holding periods were generally associated with higher nominal returns for residential real estate, but that was not always the case.
âIn the last two years through March 2021, the national home value has increased by 14.1%, which equates to an increase in the national median of about $ 75,000,â she said. .
âThis means that a retention period of one to two years generated the largest nominal gains per year, based on the median result.
“This is an unusual result, and it probably reflects more of the current recovery in the Australian housing market.”
Potential swimmers may have missed the boat
Nerida Conisbee, chief economist for Ray White, said the turnaround made sense in today’s booming market.
âHouse prices across Australia have risen almost 15% since the start of the pandemic, so even if you bought at a time when outlook reviews were most negative, you would have done incredibly well. ‘buy then, then sell now,’ she said.
But those considering tipping may have missed the boat, Ms Owen said.
âI think the perfect time to buy and sell in a short period of time may have already passed,â she said.
âWe are already starting to see housing price increases suffer. And there are more headwinds on the horizon and we’re starting to hear a lot of the big banks forecasting rate hikes sooner than the RBA has announced.
âWe obviously have renewed COVID cases that could potentially weigh on demand. “
Home values ââin the high end of the housing market rose 8% in the three months ending June, down from 9.2% in the previous three months, according to CoreLogic figures. .
âThis easing of the pace of growth in the high end of the market is another clear sign of a change in momentum,â she said. “The rest of the market tends to follow high-end movements, and this is the first time in nine months that the high-end growth rate has not accelerated.”