The share of profit-making housing sales across Australia has swung in the opposite direction during the first three months of the year, declining for the first time since August 2020.

According to CoreLogic’s latest Pain and Gain Report, the share of profit-making sales fell to 93.7%.

CoreLogic head of research Eliza Owen said while it was only a slight decline, the drop in the rate of profit-making sales serves as yet another sign of a changing market for sellers.

“The figures align with other key indicators such as the slowing growth rate of values, the increasing time it takes to sell a property and a fall in sales volumes at a time when access to credit has become harder and interest rates are on the rise,” she said.

Australian dwelling values recorded a decline in May, striking the first monthly drop in value since September 2020.

“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 erode throughout 2022, which will have an even greater impact on buyers who have entered the market more recently,” Ms Owen said.

Capital cities drive the decline

Capital cities drove the overall deterioration of profit-making resales, hitting a 60-basis point decline to 93.3%. Melbourne saw the steepest drop, with its share of profit-making resales going down by a full percentage point.

Among all capital cities, Hobart had the highest share of profitable housing sales for the 15th consecutive quarter at 99%, followed by the ACT at 98.8%.

“Hobart dwellings have been in incredibly high demand over the past few years, being one of two capital cities - alongside Sydney - where dwelling values have doubled in the past decade,” Ms Owen said.

Regional areas, on the other hand, maintained their strong position, recording an increase in the incidence of profit-making sales to 94.2%.

Regional Victoria had the highest rate of profitable sales in the regions, at a record high 99.4%.

Units less profitable

The report also showed that the rate of profit-making sales declined for both houses and units, but the latter posted a more substantial decline of 50 basis points.

In terms of resale median gains, the gap between the two property types was significant: $370,000 for houses and $173,000 for units.

The gap was also apparent in median losses — units recorded a median loss of $36,000 while houses reported $29,400.

Higher hold periods, higher capital gains

Despite the overall decline in the rate of profit-making sales, the report found that higher hold periods have typically resulted in higher nominal capital gains.

 In fact, properties held for a period of 30 years or more achieved median gains of $781,750.

Properties held between 24 to 26 years or those that were first purchased between 1996 and 1998 also achieved strong gains.

“Properties were acquired relatively cheaply at this time because of a significant housing market downswing through the mid-90s,” Ms Owen said

“Our analysis shows the median hold period nationally is nine years, when properties were purchased during the March quarter of 2013. Since then, Australian dwelling values have increased 70.3%, or the equivalent of around $309,000 in the median dwelling value across Australia.”

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