The top 20 local government areas where more homeowners are selling at a loss

The Australian property market has recorded 17 consecutive months of growth overall, as limited supply and high demand in most markets continue to trump the impact of higher interest rates. The median Australian home value lifted 8 percent over FY24, but not every part of the market is strong.

The profitability of resold properties provides an insight into how home or investment property ownership can go right and wrong, with a key factor being the length of time the asset is held. CoreLogic’s latest Pain and Gain report reveals 94.3 percent of 85,000 resales in the March quarter sold at a profit. That’s the highest rate of profitability since July 2010 and reflects recent strong selling conditions in most markets except Victoria and Tasmania.

The median gain per profitable resale was $265,000. Houses were more likely to resell at a profit, with 97.1 percent of house resales profitable compared to 89 percent of apartment resales. The flipside to the data is 5.7 percent of all resales resulted in a loss. The median amount of that loss was $40,000, however, that’s just in the value of the property. It does not factor in the significant costs of buying the property, such as stamp duty; nor the selling costs, such as the agents’ fee.

CoreLogic’s Head of Research Eliza Owen said short-term resales indicate how households are responding to higher interest rates. According to the report: “The two-year resales trend seems to have peaked in the year to August 2023, roughly two years after the peak in fixed term borrowing back in 2021. This data suggests the sticker shock from higher mortgage rates may have had some influence on decisions to sell more property than otherwise would have transacted after a short hold period.”

The median hold period of all resold homes was 8.8 years in the March quarter. “Time in the market rather than timing the market is critical to maximising returns for most resales,” Ms Owen said. “Generally, the longer a vendor holds a property the higher the returns, with vendors selling after 30 or more years attracting the largest median gain of $780,000.” By comparison, the median gain among profitable resales that occurred within two years of purchase was $82,000.

Within the top 20 local government areas (LGAs) of each capital city where the highest proportion of loss-making sales occurred, a common theme was shorter hold periods for the loss-making sales compared to the profit-making sales in 14 of those 20 areas.

Here are the top 20 capital city LGAs for the most loss-making sales in the March quarter.

Melbourne LGA

Loss-making sales totalled 38.9 percent of all resales in Melbourne. The median hold period among loss-making sales was 9.8 years and the median capital loss was $54,500.

Perth LGA

Loss-making sales totalled 38.4 percent of all resales in Perth. Vendors who sold at a loss held their properties for a median of 11.5 years and the median loss was $54,000.

Darwin LGA

Loss-making sales totalled 33.6 percent of all resales in Darwin. The median hold period among loss-making sales was 10.4 years and the median capital loss was $70,000.

Stonnington LGA, Melbourne

Loss-making sales totalled 29.8 percent of all resales in Stonnington. Home or investment owners who sold at a loss held their properties for a median of nine years. The median loss was $57,000.

Palmerston LGA, Darwin

Loss-making sales totalled 26.5 percent of all resales in Palmerston, which is a satellite city to Darwin. The median hold period among loss-making sales was 10.2 years and the median loss was $82,000.

Parramatta LGA, Sydney

Loss-making sales totalled 25.3 percent of all resales in Parramatta. The median hold period among loss-making sales was 7.8 years and the median capital loss was $49,750.

More than a quarter of properties sold in Parramatta made a loss in the past financial year. Image: Shutterstock

Yarra LGA, Melbourne

Loss-making sales totalled 24.7 percent of all resales in Yarra. Owners who sold at a loss held their properties for a median of 8.2 years. The median loss was $40,000.

Port Phillip LGA, Melbourne

Loss-making sales totalled 23.9 percent of all resales in Port Phillip. Vendors who sold at a loss held their properties for a median of 8.7 years and the median capital loss was $42,000.

Strathfield LGA, Sydney

Loss-making sales totalled 22.8 percent of all resales in Strathfield. The median hold period was 7.4 years and the median loss was $60,000.

Ryde LGA, Sydney

Loss-making sales totalled 22.4 percent of all resales in Ryde. The median hold period among loss-making sales was 7.8 years. The median capital loss was $51,500.

Burwood LGA, Sydney

Loss-making sales totalled 20.9 percent of all resales in Burwood. Home or investment owners who sold at a loss held their properties for a median of just 5.3 years and the median loss was $63,500.

20.9 percent of properties in Burwood sold at a loss in the past financial year.

Vincent LGA, Perth

Loss-making sales totalled 20.5 percent of all resales in Vincent. The median hold period among loss-making sales was 10.2 years. The median loss was $40,000.

Maribyrnong LGA, Melbourne

Loss-making sales totalled 20.4 percent of all resales in Maribyrnong. The median hold period was 6.7 years and the median capital loss was $37,250.

Boroondara LGA, Melbourne

Loss-making sales totalled 19.7 percent of all resales in Boroondara. Property owners who sold at a loss held their assets for a median of 9.1 years and the median loss was $40,000.

Moonee Valley LGA, Melbourne

Loss-making sales totalled 17.9 percent of all resales in Moonee Valley. The median hold period was 7.3 years. The median capital loss was $41,000.

Belmont, Perth

Loss-making sales totalled 17.4 percent of all resales in Belmont. The median hold period among loss-making sales was 10.1 years and the median loss was $35,000.

Cumberland LGA, Sydney

Loss-making sales totalled 15.4 percent of all resales in Cumberland. Home or investment owners who sold at a loss held their properties for a median of 7.2 years. The median loss was $35,000.

Subiaco LGA, Perth

Loss-making sales totalled 14.3 percent of all resales in Subiaco. The median hold period among loss-making sales was 10 years and the median loss was $50,000.

Victoria Park LGA, Perth

Loss-making sales totalled 13 percent of all resales in Victoria Park. The median hold period was 10.2 years. The median capital loss was $42,500.

Sydney LGA

Loss-making sales totalled 12.6 percent of all resales in Sydney. The median hold period among loss-making sales was 7.2 years and the median loss was $57,000.

As the French escape to the Mediterranean to beat the heat this summer, something else is cooling off along the Côte d’Azur—luxury home prices.

That has opened an opportunity for buyers looking to get good deals in a French region that’s seen as a safe long-term bet.

Prices along the French Riviera dipped slightly in 2023 from the year before dipping by 7% around Cannes and 5% in St. Jean Cap Ferrat. In Saint Tropez, which tends to be more resistant to the fluctuations in the market, prices remained steady from last year.

“We’re seeing prices coming down a small amount,” said Jack Harris, an agent with Knight Frank. “It’s by virtue of the fact that we’ve seen such growth over the last few years—it’s that wind coming out of the sails.”

Prices along the Mediterranean shot up during the peak pandemic years, as both domestic and international buyers flocked to the sun-drenched region with its expansive villas and outdoor space. During that time, prime prices increased by 14.8% on average across the Riviera, according to the Knight Frank report. In St. Tropez, prices increased 17.1% between 2019 and 2022.

An overheated market? Probably, argues Stephen Moroukian, head of product and proposition for real estate financing at Barclays Private Bank.

“During the pandemic, we saw a once-in-a-generation uplift in prices,” he said. “It’s right that some of that should come off proportionate to the increases that we saw.”

Stunted demand from buyers is in part to blame for the cooling prices.

Foreigners make up 70% of the total buyers in the prime sector, Knight Frank research shows. Those buyers in particular may be hesitant to invest during a major election year for both the U.S. and France, where president Emmanuel Macron last month held snap legislative elections in response to his party’s poor performance in the European elections.

“Global political and economic uncertainty has certainly had an impact on the market,” Harris said.

Beyond uncertainty, buyers have also hesitated at higher interest rates across Europe. Though the increased cost of borrowing may not directly impact the ultra-wealthy—many of the Riviera’s buyers make all-cash offers—it does impact buyers’ overall sentiment toward luxury purchases.

Despite the price deflation, buyers shouldn’t expect to get away with major price reductions—most agents are seeing the ability to negotiate 5% or 10% off the sales price, Harris said.

“A lot of people hear ‘softening market,’ and they think they can offer half the price and they’ll get a house,” he added. “Sellers don’t need to sell right now—it’s a question of selling at the right price, rather than desperation.”

New Development Pushes Down Prices

Also keeping prices low is a gradual increase in inventory.

Despite high building costs , the French Riviera has seen continued construction since the pandemic, when developers looked to capitalise on increased interest in the region. As a result, the Riviera has seen new subdivisions on vacant land, mostly around the Cannes area, as well as tear-downs of older apartment buildings in denser urban blocks.

In Nice, several luxury apartment buildings are going up near the marina and the Vielle Ville (or “Old Town”)—a posh area that has seen limited construction in recent years. And in Cannes, developers recently purchased the historic Palm Beach complex, which they are renovating into an exclusive members club and bar, a casino, and a luxury shopping mall, which has also attracted nearby luxury apartment developers .

“As those properties get delivered and the demand weakens, we are seeing a softening in prices,” Harris said.

The glut of supply may only be temporary. Some of the cities that approved ambitious developments in recent years are now seeing residents resist new housing. In Cannes, residents have expressed concerns about new housing blocking existing apartment’s views. And in Vence, northwest of Nice, the mayor recently blocked the second phase of a 220-unit project, saying that the project needed to be “reduced and revised,” according to French newspaper Nice-Matin .

Variation Across Housing Types and Location

Few sweeping generalizations can be made about the French Riviera market as a whole.

“This is an expansive stretch of coast, and the market is very diverse,” Harris said.

Don’t expect to find prices falling in the most sought-after neighbourhoods, though. In Saint Tropez, median home prices increased to €20,900 (US$22,598) per square meter in May, an 18% increase year-over-year, while apartments increased in price by 1%, to €12,929 per square meter. In Saint-Jean-Cap Ferrat, home prices increased 13% to €23,431 per square meter while apartments increased 4% to €13,997 per square meter.

Meanwhile, prices in Monaco—whose geography severely constrains new construction—continue to blow nearly every other city out of the water. Prices there reached €51,500 per square metre in 2023. Of the 28 sales in the tiny tax haven last year, 17 were valued at more than €20 million.

“There’s been a flight to best-in-class assets,” Moroukian said. “These properties will always outperform other properties. It’s once in a generation that these come onto the market.”

Signs of Improving Prices

Despite a cooldown in prices over the last year, real estate experts say that the fundamentals around the French Riviera—its pristine beaches, the east access to international airports, its renowned film festival and the Monaco Grand Prix—continue to be a draw for buyers.

“There will always be lots of international buyers, as well as domestic interest,” Moroukian said. “It’s a place where many French think about retiring, but you also have many young people moving there.”

In the last decade, Nice has also positioned itself as a hub for tech, allowing the city to evolve from a retiree’s paradise into an employment centre as well.

“There’s now a much broader spectrum of people coming to the region,” Moroukian added. “All these things mean that demand will remain.”