Why one in five Melbourne apartment resales loses money

Apartment prices fell again this quarter, and the headlines have noticed. That number is the least useful thing you can know about apartments right now. The number that should change how you buy is this one: in a national market where roughly 96% of property resales make a profit, about one in five Melbourne apartment resales still loses money.

First, what actually happened to prices

Domain's June quarter 2026 report had combined capital city house prices down 1.4% and unit prices down 1.2%, ending the longest run of uninterrupted quarterly growth since the mid 2010s. Cotality had Melbourne units easing around 0.4% in June, leaving them close to flat over the year.

Read that again, because the popular version of this story gets it backwards. Units did not fall harder than houses. They fell slightly less. Affordability pressure in a rising-rate year has pushed more buyers toward cheaper stock, and that has supported unit values while houses gave back more ground, the same force driving the metro and regional split we wrote about recently. Anyone telling you apartments are collapsing in 2026 is not reading the same data.

The number that matters is the resale, not the month

Monthly index moves wash out. What does not wash out is what happens when an owner actually sells. Cotality's Pain & Gain report for the March 2026 quarter measures exactly that, comparing each resale against what the seller originally paid.

Resales that made a nominal profit	Share
All Australian resales	Around 96%
Houses (national)	About 97.9%
Units (national)	About 90.6%
Melbourne units	About 81%

Be careful with that last row: it is a city figure sitting beside national ones, shown separately because Melbourne units are the weakest major unit market in the country. The clean like-for-like comparison is the middle two rows, national houses against national units, and the gap there is still roughly seven percentage points.

Nationally, units make up roughly a third of resale activity but account for around 69% of every loss-making resale in the country. Melbourne and Sydney units carry the bulk of that: reported analysis of the same quarter put the two cities at about 82% of national unit losses, concentrated in a short list of council areas including the City of Melbourne, Stonnington and Port Phillip.

One honest counterpoint that rarely gets quoted. Melbourne's loss-making unit resales improved over that quarter, falling by around 13.5%. The trend is moving the right way. The level is still the worst of any major market in the country.

Why the gap exists

The obvious objection is that this is just the cycle: plenty of these sellers bought near the 2022 peak, so of course some are underwater. That objection does not survive the comparison, because house sellers in the same quarter faced exactly the same cycle, the same rate rises and the same soft market, and still resold profitably about 97.9% of the time. Same conditions, very different outcomes. The explanation has to be in the asset, and there are four parts to it.

You are buying a building, not land

Land appreciates. Buildings depreciate, and they need replacing. In a standalone house, land is usually most of what you paid for, so the depreciating part is the smaller part. In a high-rise apartment your share of the land can be a rounding error split hundreds of ways, so you own mostly the part that ages. That single fact explains more about long-run apartment performance than any market cycle.

Supply can be replicated. An established street cannot

Capital growth comes from scarcity. Nobody can manufacture more land in an established suburb, but a developer absolutely can put another 300 apartments up the road, and in Melbourne's high-supply pockets they repeatedly have. Where new stock keeps arriving, it competes directly with yours at resale. That is why unit losses cluster geographically rather than spreading evenly.

The holding costs are higher, and they are climbing

Owners corporation fees are not a rounding error on an apartment's return. Industry reporting through 2026 suggests Victorian owners are paying materially more than they were two years ago, with figures in the range of 20% to 30% commonly cited, driven mostly by insurance. In high-rise buildings, insurance alone is reported to consume a large share of the annual levy. Buildings with cladding or defect histories have faced special levies reported anywhere from $20,000 to $50,000 per lot. A yield that looked attractive on the listing can be substantially eaten by all of this, and unlike your mortgage rate, you do not control it.

Off the plan adds its own problems

A brand-new apartment carries a premium for being new. That premium does not survive to your resale, because by then it is a used apartment competing with the newer building next door. Off-the-plan buyers also carry settlement valuation risk: if the bank values the finished property below the contract price, you fund the difference in cash. Both risks are widely documented and both are entirely foreseeable before you sign.

The Victorian policy wrinkle

Victoria's expanded off-the-plan duty concession lets buyers deduct construction costs when duty is calculated, and it is not limited to first home buyers or owner-occupiers. Reported average savings sit around $24,500. The 2026-27 Victorian Budget moved to extend it to 20 April 2027, subject to legislation, from a previous expiry of 20 October 2026. Confirm the current status with the State Revenue Office before you rely on it.

Take the saving if you qualify. Just be clear about what it does. It lowers your cost of entry. It does nothing to the resale economics on the way out, and a concession that makes buying easier for you also made buying easier for everyone who will be competing with you when you sell. Read it as a discount, never as a reason to buy something you otherwise would not.

In fairness to apartments

None of this makes apartments a mistake. For many buyers they are the only way into a location worth being in, they usually cost less to hold than a comparable house in the same suburb, and they often produce a better rental yield. Roughly four in five Melbourne apartment resales still made a profit.

The losses also concentrate rather than spread. They cluster in high-supply, high-rise stock in a handful of council areas. A small walk-up block of six in a tightly held street, with a real land share and a sane owners corporation, behaves very differently to a 400-unit tower with a rotating supply of near-identical competitors.

The error is not buying an apartment. The error is buying an apartment while quietly expecting it to perform like a house, then discovering the difference at resale. Yield and capital growth are different jobs, and most apartments are better at the first.

What to check before you buy one

• The resale record of that specific building. Not the suburb median. Individual units in the same block resell often enough to show you a pattern, and the pattern is the answer.
• Your actual land share, via the lot entitlement and liability on the plan of subdivision.
• The owners corporation financials. Sinking fund balance, current fees, fee history, insurance premium trend, and any special levy struck or foreshadowed. The OC certificate comes with the Section 32; read all of it.
• Defect and cladding history, including any rectification work still outstanding.
• The supply pipeline in the postcode. Approved projects nearby are your future competition at resale.
• Whether you are paying a new-build premium, and what comparable established stock trades for.
• Holding costs modelled honestly, including Victoria's investor tax settings if you are not living in it.

Every Precursor report answers these from the public record for the specific property, including the building's own resale history and a fair-value range from real comparable sales. The point is not to talk you out of an apartment. It is to make sure the one you buy is the kind that holds up, and that you knew which kind it was before you signed.

Sources: Domain House Price Report, June quarter 2026; Cotality Home Value Index, June 2026; Cotality Pain & Gain report, March 2026 quarter, and reported analysis of it; Victorian State Revenue Office and 2026-27 Victorian Budget materials on the off-the-plan duty concession; industry reporting on Victorian owners corporation fees and cladding levies. Owners corporation and levy figures are reported ranges, not official statistics. Market data dates quickly, so confirm current figures before acting.