Australia housing downturn trims resale profits in June

Australia's housing downturn reduced resale profits in the June quarter, with the share of profitable resales retreating from a 21-year high, according to Cotality.

The property analytics group analysed more than 94,000 residential resales and found 95.4% delivered a nominal profit, down from 96.1% in the March quarter. The median gain slipped to $371,000 from $378,000, while the median loss edged up to $45,000 from $44,000.

The number of resales covered by the report also fell from almost 101,000 in the previous quarter, as national dwelling values declined 1.5% over the three months to June.

Gerard Burg, head of research at Cotality, said the figures pointed to a modest shift after several years of strong price growth that left many owners with sizeable equity.

"Profitability is still exceptionally high by historical standards, but we are starting to see the impact of weaker housing market conditions flow through to resale outcomes," Burg said.

"Most sellers are still benefiting from the significant value growth accumulated over the past five years, which is providing considerable protection against the early stages of the downturn. With home values falling across more markets, that buffer will become increasingly important in determining resale outcomes," he said.

Hold period

Length of ownership remained an important dividing line between profitable and loss-making sales. Profitable resales were held for a median 9.1 years nationally in the June quarter, compared with 8.1 years for loss-making transactions.

The pattern was sharper for houses. Houses sold at a profit had typically been held for 9.3 years, while loss-making house resales had been held for 4.4 years.

Cotality linked many of those shorter hold periods to purchases made around 2022, when home values were near an earlier peak before interest rate rises slowed the market.

"Owners who have held their property for nine or 10 years have generally experienced several periods of value growth, giving them a much larger equity buffer when market conditions weaken," Burg said.

"Recent buyers have had much less time to accumulate those gains and are therefore more exposed when values fall, particularly if they bought close to a market peak. However, longer ownership doesn't always guarantee a profit, and the results vary considerably by market and property type, but the likelihood of a profitable resale generally increases with time," he said.

WA leads

Western Australia dominated the table of local government areas with the highest median nominal gains. Chittering, north-east of Perth, recorded the highest median gain in the country in the June quarter at $872,500.

Cambridge ranked second with a median gain of $740,000, followed by Joondalup at $732,500. Kiama, on the New South Wales South Coast, followed at $725,000, while Noosa on Queensland's Sunshine Coast ranked sixth at $711,000.

The rankings mark a shift away from lifestyle markets that featured prominently in earlier periods. Cotality said Western Australia's recent housing upswing had lifted its local markets to the top of the national table.

Houses and units

Houses continued to outperform units on resale profitability. Some 97.8% of house resales delivered a nominal gain, compared with 90.5% of unit resales.

The gap was also reflected in the size of returns. Profitable house resales recorded a median gain of $435,500, compared with $251,000 for units.

Losses on unit sales were concentrated in Sydney and Melbourne, which together accounted for 83.3% of the value of unit resale losses nationally. In Melbourne, 20.8% of unit resales recorded a loss, compared with 4.3% of houses, while 11.4% of Sydney unit resales sold below their previous purchase price.

Almost 39% of the value of all unit resale losses nationally was concentrated in five local government areas: Melbourne, Parramatta, Stonnington, Port Phillip and Sydney.

"The national median house was 36.5% more expensive than the median unit in June, compared with a premium of 21.2% five years ago, which gives some indication of how far the two sectors have diverged," Burg said.

"Unit losses are also highly concentrated. Most apartment owners are still selling for a profit, but the risk of a loss is considerably higher in parts of Sydney and Melbourne where value growth has been weaker. In the Melbourne and Parramatta LGAs, unit values are still below peaks recorded in mid-2017," he said.

Capital cities

Brisbane remained the most profitable capital city, with 99.8% of resales producing a gain and a median profit of $525,000. Adelaide ranked second at 98.9%, and its median gain rose from $472,000 to a record $480,400.

Perth followed, with 98.8% of resales recording a profit and a median gain of $470,000. At the other end of the market, Melbourne posted the lowest share of profitable resales among the capitals at 89.0%, down from 90.7% in March, while the median gain fell to $278,000.

Regional markets continued to produce a higher rate of profitable resales than the combined capitals. Some 97.5% of regional transactions delivered a gain, compared with 94.1% across the capitals, although profitable capital-city sellers recorded a higher median gain at $415,000 versus $324,500 in regional Australia.

Burg said pressure on resale outcomes was likely to rise if housing values continued to weaken.

"Affordability and mortgage serviceability were already constraining buyers before the downturn, with three interest rate increases in the first half of 2026, higher cost-of-living pressures, weaker consumer sentiment and changes affecting property investors adding further pressure on housing demand," he said.

"There is significant uncertainty around the short-term economic outlook, particularly the direction of interest rates and increasing pressure on household budgets. If housing values continue to fall, we would expect that to place further downward pressure on resale profitability over the coming quarters," Burg said.