Property profits hit record as first home buyers face an inheritance-shaped barrier

I bought a place in Western Sydney in 2007, three months before the GFC. Everyone told me it was a sure thing. It took me six years to get back to what I paid. I think about that purchase every time someone tells me Sydney property only goes up.

But here's the thing: I was one of the unlucky ones. The data out this week from Domain shows that for the first time in 15 years, more than 90% of house resales in every Australian capital city turned a profit. Nationally, 97.5% of houses and 88.3% of units resold at a gain.

When 97.5% of sellers walk away with more than they paid, you're not looking at a market anymore. You're looking at a wealth-transfer machine running on autopilot.

The numbers that matter

Sydney's median house profit hit $750,000 in the second half of 2025, an 11.1% increase on the year before. Think about that for a moment. The average person who sold a Sydney house last year walked away with three-quarters of a million dollars more than they paid. In some postcodes, significantly more.

But Sydney isn't even leading the pack anymore. Brisbane and Perth both recorded 99.5% profit-making house resales. Adelaide came in at 98.2%, with sellers 15.5% better off than they were 12 months earlier. Even Melbourne, which has been the soft market story of the past few years, saw 95.9% of house sales deliver a profit.

Domain's chief economist Nicola Powell put it bluntly: the profitability is now everywhere.

The extraordinary capital growth in Australia's property market is moving into home owners' pockets at unprecedented levels as more households turn a profit. As home owners stay put for longer, they are seeing their equity build up over multiple price cycles.

— Dr Nicola Powell, Domain Chief Economist

Where the real money is

If you want to see what intergenerational wealth transfer looks like in suburb form, look at Sydney's Eastern Suburbs-North precinct. Paddington, Woollahra, Vaucluse, Bondi. The median profit there was $2.77 million. Not the sale price. The profit.

Manly came in at $2.32 million. Chatswood and Lane Cove at $2.035 million. Over on the west coast, Perth's Cottesloe-Claremont recorded the highest median profit outside Sydney at $1.4 million. Brisbane's inner suburbs, including New Farm, Toowong and East Brisbane, delivered median profits of $1.157 million.

But the more interesting story isn't in the blue-chip postcodes. It's in the suburbs that used to be considered entry-level.

Even the entry points are gone

St Marys, out in Sydney's far west, posted a 100% success rate for profitable house resales. Every single house that sold in St Marys made money for the seller. Campbelltown and Sutherland both scored above 99%.

In Melbourne, Frankston (98.7%), Knox (98.1%) and Dandenong (98.1%) topped the charts. These are the suburbs that property spruikers used to call "affordable alternatives" for young buyers. They're not alternatives anymore. They're just more expensive than they were, with the same profit dynamics as the rest of the market.

I know a couple in their early thirties who've been saving for five years. They started looking in Penrith, then moved to St Marys, then to Mount Druitt. Every time they get close to a deposit, the goalposts move. Their parents rent. There's no Bank of Mum and Dad backup. The market doesn't care.

The inheritance-shaped door

Powell's report included a phrase that should be getting more attention than it is: the barrier to entry is increasingly defined by existing family equity, rather than individual savings alone.

In plain terms: if your parents own property, you can probably buy. If they don't, good luck.

The sheer size of these profits is creating a wider gap between established owners and those attempting to enter the market, making it increasingly difficult for younger Australians to buy property without the support of intergenerational wealth.

— Dr Nicola Powell, Domain Chief Economist

This isn't a new observation, but the scale is. Bob Breunig, director of the ANU's Tax and Transfer Policy Institute, testified to a parliamentary committee last month that Australia is on track toward what he called a "neo-feudal society" where prosperity depends on whether your parents own land.

That sounds dramatic until you look at the numbers. A young person whose parents own a Sydney house worth $1.5 million can access a gift or guarantee that gets them into the market. A young person whose parents rent in Logan cannot. Same income, same savings rate, different outcomes. The divide compounds over time.

The unit exception that proves the rule

Melbourne's unit market is the one place where the profit machine has stalled. Only 75.4% of units sold in Melbourne made money, with a median profit of $122,000 (down 2.4% on the year). Darwin was worse: 72% profitable, median profit of $78,500. Canberra units saw a 7.8% drop in profitability.

The reasons are structural. Melbourne built a lot of apartments in the 2010s, many of them poorly. Small floor plates, minimal storage, investor-grade finishes. Buyers are now more discerning, and the oversupply has created genuine price competition.

If you want to know what happens when supply actually meets demand, look at Melbourne apartments. Then consider why we haven't built enough houses anywhere else in the country.

Regional markets tell the same story

Outside the capitals, 95.8% of units resold for a profit, better than the 86.2% rate in major cities. Regional sellers pocketed a median $260,000 on units compared to $215,000 in the metro markets. Regional Queensland and regional NSW were the strongest performers.

The COVID-era migration patterns have stuck. People who moved to the regions kept their city salaries (remote work) and their city expectations (housing quality). Local buyers got priced out the same way Sydney buyers did a decade earlier.

The Tweed Valley in NSW had the state's third-largest median house profit at $630,000. It also had the worst median loss at $312,500 for those who bought at the wrong time. Noosa had a $910,000 median profit and a $150,000 median loss. Real estate rewards timing, and not everyone times it right.

What the policy failure looks like

Sydney is underbuilt by at least 200,000 dwellings, probably more. We've known this for years. We've done very little about it. Every report, every Senate inquiry, every think tank submission says the same thing: build more housing, particularly medium-density housing near transport.

Instead, we get negative gearing, which incentivises buying existing stock rather than building new supply. We get capital gains tax discounts that reward speculation. We get planning systems designed to protect existing property values (read: existing property owners) at the expense of new entrants.

Brendan Coates, the Grattan Institute housing economist who just moved to Treasury to lead the housing supply team, put it this way in 2025: in every decade up until the early 2000s, we built vastly more homes than we needed just to meet population growth. Since then, we haven't. The deficit has been accumulating for two decades.

The result is what we see in Domain's data: a market where nearly everyone who sells makes money, and nearly everyone who wants to buy needs help from someone who already owns.

Where to from here

The RBA raised rates again last week. It won't crash the market. It never does, not in a supply-constrained system with strong migration and insufficient construction. Prices might soften in some postcodes. They won't fall enough to change the fundamental dynamic.

If you own property, congratulations. Your equity is your financial shield, as Powell called it. You can weather higher rates because you can sell at a profit if you need to.

If you don't own property and your parents don't either, the market has a message for you: it would prefer you to rent. The Domain data covers sales from the second half of 2025. Current median Sydney house prices are around $1.6 million. The deposit alone is larger than the entire purchase price of a St Marys house in 2007.

The rotation west that Domain identified is real. Perth and Brisbane have been outperforming Sydney for three years now. But rotation doesn't mean affordability. It means the money is moving. The first home buyer in Perth faces the same structural barriers as the first home buyer in Sydney. The numbers are just smaller for now.

I got lucky with timing in the end. My 2007 purchase eventually made money. But I had time to wait it out, and I didn't have to compete with buyers backed by seven-figure gifts from their parents. Today's first home buyers don't have that luxury. The barrier to entry has changed shape. It looks like an inheritance.