Property listings have been rising. Picture: NCA NewsWire/ Gaye Gerard

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Desperate homeowners have been offloading their properties for less than they paid for them after giving up hope of an early interest rate cut, with up to two in five sellers in some city areas making a loss.

The staggering losses have averaged as much as $69,000 in some areas – mostly high density markets where a glut of high-rise units were built and later sold to investors.

Losses were most common in the CBDs of Melbourne, Perth and Darwin, along with Sydney’s second CBD Parramatta, analysis of property sales over the three months to September showed.

Other notable losses were recorded in Sydney regions Ryde, Strathfield and Burwood, along with the Port Phillip and Stonnington areas in Victoria.

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About 40 per cent of sellers made a loss in the Melbourne CBD. Picture: NCA NewsWire / Luis Enrique Ascui

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It’s come as housing experts warned that a dramatic overhaul of negative gearing and capital gains tax benefits would encourage even more loss-making sales from landlords.

The result would be a critical reduction of rental stock at a time of chronic shortages and rampant tenant demand due to record migration.

“Changing negative gearing would make the situation far worse,” said Louis Christopher, director of SQM Research.

“More investors would sell and any slight change in unit supply could potentially put downward pressure on prices even though there is fundamentally an (Australian) shortage of housing.”

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Properties in this Parramatta building have changed hands for less than the owners paid.

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The controversial tax incentives were in the spotlight last week after it emerged that treasury officials had sought advice on changing the policies.

Prime Minister Anthony Albanese has since clarified that Labor were not considering taking negative gearing reforms to the next Federal election.

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Ben Kingsley, chairman of the Property Investment Council of Australia, said investors selling up rental properties would have a negative impact on rents.

“Outside of the much-needed social housing for our most vulnerable citizens, who’s going to provide the short term housing for those starting a job … new immigrants or those wanting a lifestyle change?” he said.

Prime Minister Anthony Albanese confirmed last week that treasury officials had sought advice on negative gearing changes. Picture Getty Images

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Negative gearing changes would “suffocate the supply of private rental accommodation”, Mr Kingsley added.

“As well as the bleeding obvious, rents will increase to offset the increased holding costs, for the minority of small business owners who still choose to stay in this line of investing.”

Recent seller losses were concentrated in high density markets where a glut of apartments were built over recent years. It’s understood most had sold to investors who snapped them up off the plan.

Just shy of 39 per cent of sellers in the Melbourne CBD accepted a price below what they paid, according to a report by CoreLogc. The median loss was $64,000.

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Listings have been increasing in many areas. Picture Thomas Lisson

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There was a similar trend in the Perth CBD, where just over a third of sellers accepted a price below what they paid for their properties. For most vendors, the loss was about $42,000.

About 36 per cent of sellers in the Darwin CBD made a loss, while in satellite city Palmerston it was about 30 per cent.

One in four sellers in Sydney’s second CBD Parramatta made a loss. On average, they sold for about $50,000 less than they paid for their properties.

About one in five sellers in Sydney’s Strathfield, Burwood and Ryde accepted a loss on their resale, while in the Sydney CBD and Liverpool it was about one in 10 sellers.

Losses were rare in Brisbane and Adelaide, which remain among the strongest markets in the country.

Mr Christopher said the loss making sales were likely fuelled by investors dumping properties they could no longer afford given the Reserve Bank’s hesitancy to cut interest rates.

“It’s absolutely coming from investors,” he said. “We’ve seen pockets where a lot of units were built in 2018 and the investors who bought them are now selling for a loss.

“It’s likely a lot of these properties were overpriced to begin with. And they were bought at a time when the market was hot. Buyers paid way over for these properties and then had to sell them.

“This kind of thing is a constant danger for those who buy off the plan.”

PropTrack’s latest Home Price Index showed growth in prices across the country slowed over September, rising 0.04 per cent. The average rise in capital cities was 0.01 per cent, growth described as “flat”.

Prices in Hobart, Canberra and Melbourne are now lower than they were at this time last year.