Australia's housing downturn has a Melbourne-shaped exception to its most reassuring statistic. Nationally, 95.4 per cent of the more than 94,000 resales analysed by Cotality in the June quarter still returned a profit, the ABC reports — but 20.8 per cent of Melbourne units sold at a loss, the data firm's figures show.
The quarter marks the end of a run of record resales, which hit a 21-year high in March. Nationally, sellers made a median $371,000, and houses were more reliable than units everywhere: 97.8 per cent of house resales gained against 90.5 per cent of units. Sydney's unit market had its own wobble, with 11.4 per cent — about one in 10 — selling for less than their purchase price. Melbourne's one-in-five stands apart.
'Very hard to get a profitable resale'
Cotality's head of research, Gerard Burg, said the unit markets showed a "real contrast", with a "much weaker performance" in Melbourne — where CBD unit values peaked back in 2017. "So, it's very hard to get a profitable resale in that type of environment," Mr Burg said. "In contrast, there's been a lot of demand for units in Brisbane."
Brisbane is the downturn's outlier in the other direction: the country's most profitable capital, with a median resale profit of $525,000 and 99.8 per cent of the quarter's sales making a gain. Adelaide ($472,000) and Perth ($470,000) follow — cities where, Mr Burg said, prices jumped after COVID-19 as relative affordability drew interstate migration. Regional markets also out-performed the capitals on reliability, with 97.5 per cent of resales profitable against 94.1 per cent, though metro sellers still banked the bigger median gain ($415,000 versus $324,500).
Time in the market is the buffer
Overall profitability, Mr Burg said, remains "exceptionally high by historical standards" even as the softening market pushes prices down. "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," he said. "With home values falling across more markets, that buffer will become increasingly important in determining resale outcomes."
The buffer is measured in years held. Nationally, the median hold time behind a profitable house resale was 9.3 years; behind a loss-making one, just 4.4. "The longer that you hold the property, the less exposed you are to the fluctuations that occur in an individual housing cycle," Mr Burg said — which puts the market's most recent buyers most at risk.
And the direction of travel, on Cotality's reading, hasn't changed: Mr Burg expects declining values to "persist for some time", making a profitable sale "more challenging". "There is significant uncertainty around the short-term economic outlook, particularly the direction of interest rates and increasing pressure on household budgets," he said. "If housing values continue to fall, we would expect that to place further downward pressure on resale profitability over the coming quarters." Cotality has previously modelled what deeper falls would look like across the capitals.
For Melbourne unit owners, the arithmetic is uncomfortable but specific: a market whose CBD values peaked nine years ago is entering a national downturn without the buffer that is protecting most of the country's sellers.
