Cotality Pain and Gain Report for the September quarter has been released, which showed that 95.5% of resales made a gross profit, the highest in two decades:
Source: Cotality
The median resale gain hit a record $335,000, up from $315,000 in the previous quarter and $296,000 a year ago.
Even adjusted for current values, this is the largest resale gain on record going back to the mid-90s, surpassing the previous high of $325,600 in December 2021.
Source: Cotality
The combined value of gains in the September quarter was $40.3 billion, whereas the combined losses were valued at just $272 million.
Cotality cited the three interest rate cuts in 2025 (in Feb, May, and Aug), which boosted credit access and demand, alongside eight consecutive months of price rises through September, as drivers of the record profits.
However, with economists and financial markets now projecting two 25-bp rate hikes in 2026, Cotality notes clear risks ahead.
“In 2026, the path for profitability is less certain”, Cotality noted. “A re-acceleration in inflation has shifted the trajectory for interest rates, with another move in the cash rate now more likely to be an increase”.
“Affordability already appeared to be thinning buyer demand at the higher-end of housing markets, with some higher-value segments of the Sydney housing market already moving into decline at the end of 2025”.
“The final combined capital city clearance rate result for the year dipped to 57.7%, the first time in 33 weeks the clearance rate has fallen below 60%. These weakening market conditions often coincide with slowing rates of profitability, as the chance of a loss-making sale rises”, Cotality said.
Indeed, Australian dwelling prices hit a record high of 8.2 times media incomes in the September quarter, according to Cotality.
Mortgage affordability was also tracking at close to its worst level in history, still above the GFC peak, in the September quarter:
Thus, there isn’t much fat in household budgets, which will be extremely sensitive to any interest rate hikes.
Australia’s two most similar nations—New Zealand and Canada—have experienced severe house price corrections:
What is stopping Australia from experiencing a similar retreat?
Those who have borrowed to the hilt utilising Labor’s 5% deposit scheme are most at risk from a housing correction and negative equity.
