Australian homeowners continued to benefit from years of strong property price growth during the March quarter, recording the highest resale profitability in more than two decades even as the housing market began to lose momentum under the weight of higher interest rates, affordability pressures and weakening buyer demand.
New research from Cotality's latest Pain & Gain report found 96.0% of almost 101,000 residential property resales delivered a nominal profit during the March quarter, the strongest quarterly result since 2005.
At the same time, a separate report from the property analytics firm showed Australia's housing downturn accelerated through June, with national home values recording their largest monthly decline in more than two years.
Record resale profits despite slowing market
Cotality found the median profit from residential property resales climbed to a record $377,000 during the March quarter, while the median loss remained steady at $45,000.
The results reflected the substantial appreciation in Australian housing values over recent years rather than current market performance, with many owners benefiting from extended holding periods through multiple property cycles.
Cotality Head of Research Gerard Burg said the latest figures demonstrated the enduring benefits of long-term ownership.
"The strong resale results we're seeing today largely reflect the substantial value growth accumulated over recent years rather than current market conditions," Burg said.
"Housing values continued to rise through most of 2025, and many sellers have benefited from holding their property through multiple growth cycles, which has allowed them to build significant equity over time."
Although national home values rose a more modest 2.0% during the March quarter compared with 3.0% in the December quarter, values remained approximately 9.9% higher than a year earlier, adding around $85,000 to the median dwelling value.
Nationally, properties sold during the quarter had typically been owned for almost nine years, allowing owners to accumulate close to $400,000 in capital growth over that period.
Recent buyers remain most vulnerable
While profitability remained exceptionally strong overall, recent purchasers continued to face the greatest risk of selling at a loss.
Properties sold at a loss had typically been held for only 4.3 years, meaning many were purchased near the market peak in late 2021 and early 2022 before higher interest rates began weighing on prices.
By comparison, profitable resales had generally been held for 9.1 years.
Burg said the data reinforced the financial advantages of longer ownership periods.
"Most people selling for a profit today are benefiting from years of accumulated value growth, but those who purchased closer to the recent peak have had less time to build equity and are more exposed to market fluctuations," he said.
"The figures illustrate the value of a buy-and-hold approach to property ownership. Time remains one of the most effective ways to absorb market cycles and improve the likelihood of a positive resale outcome."
Brisbane remains Australia's strongest capital city
Brisbane retained its position as Australia's most profitable capital city housing market.
Almost every resale generated a profit, with 99.8% of transactions delivering positive returns. The median resale gain increased to $525,190, supported by more than a decade of sustained price appreciation.
Brisbane dwelling values have increased by approximately 116% over the past 10 years.
Adelaide ranked second nationally, with 99.3% of resales profitable and a median gain of $477,000.
Perth followed closely, recording profits on 98.8% of resales while delivering a median gain of $475,000.
Burg attributed the exceptional performance of Australia's mid-sized capitals to strong demographic trends.
"Brisbane, Perth and Adelaide have all benefited from strong population growth, tight housing supply and sustained buyer demand," he said.
"Many owners who bought before the recent upswing, during a period of affordability and low interest rates, are now selling into a market where values have risen substantially, translating into some very significant resale gains."
Sydney ranked lower in terms of profitability despite its higher dwelling values. About 93.7% of resales produced a profit, although the city still recorded the fourth-highest median gain at $403,000.
Melbourne continued to lag the other capitals, with only 90.5% of resales proving profitable. Median gains also declined to $280,000 from $325,000 in the previous quarter as weakness in the apartment market weighed on overall performance.
Houses continue to outperform apartments
The report also highlighted the widening divide between houses and units.
Nationally, 98.1% of house resales generated a profit compared with 91.9% of apartment sales.
Median gains reached $440,000 for houses compared with $256,000 for units.
Melbourne's apartment market remained among the weakest in Australia, with only 81.0% of unit resales recording a profit.
Burg said increasing apartment supply in several markets had constrained capital growth.
"In a number of established apartment markets, particularly in Melbourne and parts of Sydney, additional supply has limited capital growth and increased the incidence of loss-making resales," he said.
"That has created a much wider performance gap between houses and units than we've typically seen in previous cycles."
Units accounted for almost 62% of all loss-making resales nationally and more than three-quarters of losses across capital cities.
Melbourne and Sydney alone represented 82% of all apartment resale losses nationwide.
Regional Australia continues to outperform
Regional property markets continued to outperform capital cities in overall profitability.
Around 97.7% of regional resales generated profits compared with 95.0% across the combined capitals.
Although regional median gains were lower at $327,500 compared with $420,000 in capital cities, stronger profitability reflected healthier performance in regional apartment markets.
Regional unit resales achieved a higher profit rate than their metropolitan counterparts, while capital city houses continued to deliver larger dollar gains.
Lifestyle destinations remained Australia's strongest-performing markets.
Queensland's Noosa recorded the nation's highest median resale gain at $729,750, while several Western Australian local government areas—including Melville, Joondalup, Nedlands, East Fremantle and Chittering—ranked among Australia's top-performing regions.
"The regions recording the largest resale gains today are generally the same markets that experienced some of the strongest housing value growth through the pandemic and post-pandemic period," Burg said.
"Places such as Noosa, a number of Western Australian markets and the Byron Shire in Northern NSW have seen demand consistently outpace supply, and those conditions have translated into substantial wealth gains for homeowners."
Housing downturn gathers pace
While homeowners continued to enjoy historically high resale profits, Cotality's latest Home Value Index painted a markedly weaker picture of current housing conditions.
National home values fell 0.4% during June, representing the largest monthly decline since December 2022.
Sydney led the downturn with a 1.2% monthly decline, followed by Melbourne, where values fell 1.0%. Canberra also weakened, falling 0.6%.
The traditionally stronger-performing markets of Brisbane and Perth continued to post gains, but growth slowed sharply to just 0.3% and 0.7% respectively.
As a result, revised data now show Australia's national housing market peaked in March, with values declining 0.7% over the June quarter.
Cotality Research Director Tim Lawless said market conditions had deteriorated more rapidly than previously expected.
"The downward revision reflects a market that is changing rapidly," Lawless said.
"Most regions have seen values revise lower over recent months, with the largest downgrades occurring in Perth and Brisbane, where the May index has been revised 88 and 53 basis points lower with the June update."
Capital city dwelling values fell 1.3% over the June quarter, with Sydney declining 3.2% and Melbourne falling 2.6%.
Affordability, rates and tax changes weigh on demand
Lawless said several headwinds were simultaneously weakening buyer demand.
"Weaker conditions through the second quarter of the year are attributable to an array of downside factors," he said.
"Even before interest rates rose by seventy-five basis points, we were seeing affordability hurdles weighing on buyer demand. Higher cost-of-living pressures, deeply pessimistic sentiment and a further dampening of demand via property taxation changes announced in the federal budget are all contributing to weaker housing conditions."
The slowdown has become increasingly evident across high-frequency housing indicators.
Auction clearance rates across the combined capitals have remained below 50% since late May and fell into the low-40% range during late June.
Estimated capital city home sales over the three months to June were 16.2% lower than a year earlier and 14.5% below the five-year average.
Meanwhile, advertised housing supply has continued to rise. Listings across the capital cities now sit almost 11% above levels recorded a year ago.
Lawless said buyers were beginning to regain negotiating power.
"Such low clearance rates indicate a mismatch between buyer and seller pricing expectations. Buyers now have more stock to choose from and less urgency in their decision-making," he said.
"Higher listings aren't due to a pick-up in the flow of new listings; it's a symptom of less demand in the market, which has led to an accumulation of advertised stock."
Outlook becomes increasingly cautious
Although supply shortages, population growth and resilient labour market conditions continue to provide some support, Cotality believes downside risks have become more pronounced.
The Reserve Bank's decision to leave the cash rate unchanged at 4.35% during June has provided temporary relief following earlier rate increases, but inflation remains above target and further tightening cannot be ruled out.
Consumer confidence also remains weak, while proposed federal budget changes affecting negative gearing and capital gains tax are expected to dampen investor demand for established housing.
Even so, softer market conditions may benefit prospective buyers by increasing available stock, lengthening selling times and reducing competition.
Burg cautioned that the record resale profits reported during the March quarter should not be viewed as an indication of future market performance.
"The resale results for the March quarter are a reflection of the strong housing conditions experienced across most capital cities over the past five years rather than a forecast of where the market is heading next," he said.
"Declining values will erode profitability in the coming months, but future performance will increasingly depend on local market conditions, property type and when a property was purchased."
While Australia is not expected to experience a sharp nationwide housing correction, Cotality expects further gradual weakness as affordability constraints, softer demand and elevated interest rates continue to reshape the property market during the second half of the year.
