Units in Sydney and Melbourne carrying the bulk of losses
The proportion of Australian home resales returning a profit has slipped from a 21-year high, a sign the national housing downturn is starting to work its way through to seller outcomes, according to Cotality's latest Pain & Gain report.
The report, which analysed more than 94,000 resales in the June quarter, found 95.4% delivered a nominal profit, down from 96.1% in March. The median gain also slipped from a record $378,000 to $371,000, while the median loss edged up from $44,000 to $45,000.
That softening has continued to deepen since: Cotality's most recent housing data shows national dwelling values fell 3.1% over the three months to August, with the combined capitals down 3.7% – led by Sydney (-4.7%) and Melbourne (-3.9%) – against a milder 1.2% decline across combined regional markets.
Units in Sydney and Melbourne carry the bulk of losses
Houses continued to outperform units by a wide margin, with 97.8% of house resales profitable compared with 90.5% of units. The gap extended to the size of the return too – a median gain of $435,500 for houses against $251,000 for units.
Loss-making unit sales were heavily concentrated in just two cities: Sydney and Melbourne together accounted for 83.3% of the total value of unit resale losses nationally, with Melbourne itself recording a 20.8% loss rate on unit resales.
Time in the market still the biggest protective factor
Profitable resales were held for a median of 9.1 years nationally, compared with 8.1 years for loss-making sales. The gap was widest for houses: profitable house resales had typically been held for 9.3 years, against just 4.4 years for houses sold at a loss.
Cotality head of research Gerard Burg (pictured) said the shift reflects weaker conditions starting to show up in resale data after years of strong value growth.
"Profitability is still exceptionally high by historical standards," Burg said.
Beyond that immediate comment, he pointed to a broader theme running through his analysis: that the equity buffer built up over recent years of growth will matter increasingly as more markets record falling values.
Brisbane holds the title, Melbourne lags
At the capital city level, Brisbane held onto its title as Australia's most profitable market, with 99.8% of resales in profit and a median gain of $525,000, while Adelaide's median gain hit a fresh record of $480,400. Melbourne recorded the weakest result of the capitals, with just 89.0% of resales profitable.
Auction results suggest the softening has further to run: the four-week average clearance rate was tracking at 49.5% at the end of August, held below 50% since early June, with Brisbane's clearance rate the weakest of the capitals at just 32.8%.
