The number of property resales that have made a profit in the first three months of the year has decreased against the previous quarter, hitting its lowest level in six years.

The latest CoreLogic Pain & Gain report revealed that 87.9% of resales made a gross resale profit in the March 2019 quarter, for a total of $14.3bn. The result is lower than the previous quarter (89.5% for December 2018) and lower against the previous year (91.0% March 2018) – in fact, it the lowest proportion of profit-making sales since way back in March 2013.

Cameron Kusher, research analyst at CoreLogic, said that the data may indicate a weakening housing market.

“When relatively few properties are selling at a loss (pain) it’s a general indicator of a stronger housing market,” said Cameron Kusher, research analyst at CoreLogic. “[However], if a higher proportion of properties are reselling at a loss, it’s a sign of weaker housing market conditions. We compare across all ‘health’ metrics: capital cities vs regions, houses vs units, investors versus owner occupiers and hold periods (the impact of the length of time you’ve held onto a property on results).”

The report showed that Sydney and Melbourne are responsible for nearly half of the quarter’s gross resale profit, with their respective share of national total profits being 24.3% (Sydney) and 23.5% (Melbourne). This was largely due to their higher cost of housing, plus the strong growth in dwelling values prior to the recent downturn.

On the pain side, Australia had a total of $486.8 million in realised gross losses from resales over the March quarter, with highest share of losses nationally seen in Perth (24.8%) and Sydney (19.9%).

Areas recording the lowest proportion of resales at a loss are in regions surrounding Sydney and Melbourne – in fact, some of these are recording even fewer resales at a loss than the capital cities themselves.

Meanwhile, the report revealed that investors continued to be more likely to resell their properties at a loss compared to owner-occupiers. Possibly because in a falling market, investors have the benefit of taxation rules and would seemingly be more prepared to incur a loss because they (unlike owner-occupiers) can offset those losses against future capital gains. This could in turn result in more supply becoming available for purchase at a time in which demand for housing remains below average due to weak conditions and tight credit.