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Melbourne has recorded the greatest fall in the number of profit-generating house resales for the March quarter, according to Corelogic’s latest Pain & Gain report.
Melbourne’s drop of 100 basis points put it ahead of Sydney with a drop of 60 basis points.
The average across Australia’s capital cities for the quarter was a drop of 60 basis points to 93.3 per cent, the first dip in 18 months.
Darwin had the lowest number of house resales making nominal gains, 55.4 per cent, while Canberra had the highest at 99.7 per cent.
Corelogic’s report analysed 106,000 home resales during the quarter.
Regional areas on average remained stronger, generating an increase of 10 points to 94.2 per cent.
Corelogic research head Eliza Owen said Hobart and the Australian Capital Territory recorded the highest nominal gains for the 15th consecutive quarter with 99 and 98.8 per cent respectively.
“Hobart homes have been in incredibly high demand during the past few years being one of two capital cities—alongside Sydney—where home values have doubled in the past decade,” Owen said.
“Both houses and units have been popular, however, conditions across this market may be starting to shift.
“In April, dwelling values experienced the first monthly decline in almost two years and total listings have started to accumulate.”
Home sales pain and gain March 2022 quarter
Region | Houses resold making a loss | Houses resold making a profit | Units resold making a loss | Units resold making a profit |
| Sydney | 1.1% | 98.9% | 7.9% | 92.1% |
| Rest of NSW | 2.0% | 98.0% | 1.7% | 98.3% |
| Melbourne | 0.5% | 99.5% | 11.8% | 88.2% |
| Rest of Vic | 0.5% | 99.5% | 1.2% | 98.8% |
| Brisbane | 0.7% | 99.3% | 13.4% | 86.6% |
| Rest of Qld | 7.1% | 92.9% | 10.8% | 89.2% |
| Adelaide | 1.3% | 98.7% | 7.1% | 92.9% |
| Rest of SA | 7.2% | 92.8% | 8.1% | 91.9% |
| Perth | 9.1% | 90.9% | 34.4% | 65.6% |
| Rest of WA | 16.3% | 83.7% | 27.7% | 72.3% |
| Hobart | 0.8% | 99.2% | 1.9% | 98.1% |
| Rest of Tas | 1.9% | 98.1% | 3.9% | 96.1% |
| Darwin | 19.8% | 80.2% | 44.6% | 55.4% |
| Rest of NT | 17.7% | 82.3% | 34.1% | 65.9% |
| ACT | 0.3% | 99.7% | 2.5% | 97.5% |
| National | 96.2% | 3.8% | 11.7% | 88.3% |
| Capital cities | 2.7% | 97.3% | 13.1% | 86.9% |
| Regional | 5.1% | 94.9% | 8.2% | 91.8% |
Source: Corelogic's Pain and Gain report, March 2022 quarter
The profit-making sales rate for houses across the quarter was 96.2 per cent while units were at 88.3 per cent.
The rate declined for both property types nationally quarter-on-quarter. House resale median gains were $370,000 compared to units at $173,000.
Units also lost more at $36,000 while houses lost $29,400.
Owens said these figures were due to an increase in apartment construction from 2012 to 2017 coupled with changes that saw a decrease in investor demand, compounding nominal losses in inner-city markets.
Conditions along regional coastlines are shifting with the impact of higher interest rates but profitability is high.
In the March quarter, 99.9 per cent of Geelong’s resales made a nominal gain, setting a record for the region and the highest of the coastal housing markets.
Geelong’s value has increased in housing by 33.9 per cent between September 2020 and March 2022 as more investors and developers rush to secure land for housing and to develop commercial and retail holdings.
In Bendigo, every resale had a nominal gain, for a median of $301,000.
Owens said this consistency could shift as recently the regions’ housing market values had declined for the first time since 2020 by 0.1 of a percentage point.
“Price declines across the market signal there could be a higher probability of loss-making sales in the coming months, though hold periods will play an important role here,” Owens said.
Sydney’s rate of profit-making sales have decreased over two consecutive quarters and Owens said that the increasing cash rate would reduce credit for housing and affect prices and profitability.
National housing market values declined by 0.1 per cent during May and more recent data suggests that the decline is accelerating.
“However, it is worth noting that price gains through the current housing market upswing have been very strong,” Owens said.
“It may only be recent buyers who will take a loss when selling compared to those who purchased before the upswing.
“Even in a declining market, the extent of Australia’s loss-making sales will largely be in line with future capital growth trends.”
