Falling home values and hesitant sellers have been translating into longer holder periods and rapidly declining profits for short-term sellers. 

New CoreLogic research has found that the portion of loss-making resales increased to 6.9% in the December 2022 quarter, up from a revised 6.6% in the three months to September. 

There were about 79,000 resales in the December quarter – 7.3% lower than the previous quarter. 

CoreLogic Head of Research and report author Eliza Owen said despite the increase the portion of loss-making resales in the December quarter remains below the previous decade average of 9.6%.  

“With 93.1% of resales making a nominal gain, the vast majority of Australian homeowners who sold a property in the quarter did so with a gross profit,” she said. 

“The decline in the volume of property sold in the final three months of 2022 reflects the reduced appetite for property purchases in the period, as well as fewer vendors being willing to sell in a weaker market. 

“The proportion of vendors selling for a loss remains relatively low, despite a rapid decline in home values in many markets. Though the underlying cash rate target increased 300 basis points between April and December 2022, homeowners increasingly opted not to sell in the current downswing.”  

Australian home values have shown signs of stabilising in the first half of March 2023 with CoreLogic’s Daily Home Value Index across the combined five largest capital cities increasing 0.3%.  

Owen said it is too soon to say whether the housing market downturn has bottomed out, but a slowdown in the pace of housing value declines usually also corresponds with a slowdown in the rate of loss-making sales.  

“While the rate of loss-making sales may show an increase in the coming quarters, the jump may not be as substantial as the 30 basis point increase over the December quarter,” she said. 

“An improvement in housing market conditions is broadly expected in the second half of 2023 and into 2024 on the presumption the RBA will have finished lifting rates by this time. If that occurs, the market may give way to a rise in housing demand amid improved consumer confidence and the strong return of overseas migration.  

“Any upward pressure on home values would broadly increase the chance of making a nominal gain from resales. This could also see the housing market cycle move through the largest national downswing on record, without hitting record levels of loss-making sales.”