Australian housing sale profits drop $8b in three months to March 2022: Corelogic

The last such decline was in the three months to August 2020, when uncertainty about the pandemic unsettled the market.

Among capital cities the profit-making resales rate fell 60 basis points from 93.9 per cent in the December quarter to 93.3 per cent in the March quarter.

In a sign that the regional housing market is not suffering the same declines as capital cities, the profitability rate of the combined regions increased 10 basis points to 94.2 per cent.

We are likely to see the instance of nominal gains from dwelling resales eroded throughout 2022.

CoreLogic’s Eliza Owen

Sydney and Melbourne, the cities most vulnerable to higher interest rates, made the biggest contribution to loss-making sales over the quarter, with the rate of unprofitable sales in both cities rising to 4.8 per cent. The NSW capital was up 60 basis points and the Victorian capital was up 1 percentage point.

“Conditions in these markets have been slowing more sharply than other capital city markets, as average mortgage rates have trended higher,” CoreLogic said.

“Historic trends suggest these markets are more sensitive to changes in the credit environment due to higher property values, and a higher concentration of investment activity.”

Hobart was the city with the highest proportion of profit-making sales for a 15th straight quarter. Just 1 per cent of the Tasmanian capital’s sales made a loss in the March quarter, down from 1.6 per cent in December.

The report also shows the different pace of growth between houses and apartments that has made units more affordable continued into the March quarter.

Between the start of COVID-19 in March 2020 and the March quarter this year, combined capital city house values ​​rose 25.8 per cent and units 10.6 per cent.

Unit sellers also made a larger median loss in the March quarter – $36,000 – compared with the median house resale loss of $29,400.

The biggest proportion of loss-making unit sales in the quarter was in Darwin (44.6 per cent), followed by Perth (34.4 per cent), Brisbane (13.4 per cent) and Melbourne (11.8 per cent).

The 0.1 per cent decline in national dwelling values ​​in May, the first such broad-based decline since September 2020, meant resale losses were likely to pick up, Ms Owen said.

“Against a backdrop of rising interest rates, tighter credit conditions and affordability pressures we are likely to see the instance of nominal gains from dwelling resales eroded throughout 2022, which will have an even greater impact on buyers who have entered the market more recently,” she said.

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