Home owners staying put longer

New research from RPData shows that the average holding period for Australian property continues its upwards trend:

Cameron Kusher’s findings show that data to December 2012 identified that the average length of ownership for houses and units (based on
properties sold over the year) was 9.3 years, and 8.2 years respectively. Ten years ago, the average hold period for a house was 6.8 years, and
for a unit it was 5.9 years.

With the longest hold periods recorded in Melbourne, houses in the city were held for 10.8 years, while the hold period for units is now 9.2 years. Sydney followed with houses held for 10.1 years, and units for 8.2 years.

Makes sense as flipping declines along with the slow melt of the boom. Full report below.

7MarchPropPulseHoldPeriods2013 by Brian Ford

Latest posts by David Llewellyn-Smith (see all)

Comments

      • Interest earned simply from the outlay of stamp duty, 10 or 20% deposit, yearly rates/house insurance pretty well much will cover rent, and some.

        • waltK – let’s crunch your numbers on a $600k Sydney house, which you could rent for about $500-$600/week in today’s market.

          * 20% deposit; $120k
          * Stamp duty: $20k
          * Annual Council Rates: $1.2k/year
          * Annual Water Rates (not usage): $0.7k
          * Presumed marginal tax rate of 38.5%
          * Presumed bank interest rate of 5%

          – Interest earned on deposit and stamp duty, after tax = $4.3k/year
          – Amount saved from not paying rates etc = $1.9k/year
          – The abive totals $100/week

          So, the ownership opportunity and actual costs you mention in fact only cover 15-20% of the equivelent rent, and certainly not “cover rent, and some”.

          The figure is even less if we use a 10% deposit…..

          • PS – I left off building insurance, but that’s only about $500/year for a typical house, or $10/week. Only changes the figures by a small amount.

          • Sorry gonderb,

            You are right….

            I was eluding to interest earned from outlay plus mortgage repayments (interest only).

            The $480,000 loan mentioned above is going to cost about $500/week in repayments (if interest rates stay nice and low).

    • what’s good about flipping homes?

      Countries like Germany where buying and selling is discouraged have significantly more affordable housing.

      • It is currently one major source of revenue for State governments and employs a multitude of people in the Real Estate Industry*.

        * Who would be selling used cars or steak knives otherwise.

  1. Victoria increased six months last year. Does that mean half the people who would normally moved didn’t?

    • No, it means the gains to be made by flipping a property weren’t there. And so only the people who were moving for other reasons did so

  2. Might print this out for some more TP. Oh wow, the mean changed, but we have no idea what the variance is. Is this a 0.1 sigma change or a 4 sigma change? It’s amazing the standard of output from these “analysts” that is considered reasonable.

  3. The media release concludes: “Note: The average hold period is a simple calculation that looks at the difference between the dates of previous purchase and compares it to the most recent sale.”

    The implication seems to be that the average is taken over homes that change hands, not over all homes. The average over all homes would be longer. Indeed, RBA figures indicate that turnover of the housing stock has varied between 4%/year and 8%/year.

  4. Yep, it’s bit of a no brainer. You can’t sell your existing home and buy a bigger/better home when you have negative equity in your existing home and/or transaction costs like agents fees and stamp duty wipe out any gains that you may have made over the past 4-5 years.

    Many who purchased property in the past 4-5 years have made ZERO real (inflation adjusted) gains after holding/transaction costs.

    • But many will have had income increases of say 25% through promotion and inflation over the last 5 years and be able to borrow more now and so able to upgrade if they wish.

      And I’m not sure whether even in Melbourne people prices are back 5 years. From memory a recent post indicated they might be back to June 2010.

    • This UK experience is probably more of a factor for those who were buyers who have not received promotion. Those who enjoyed the single life and married and bought in their early 30’s would be less likely to be getting promotion pay rises and wage growth in a country with austerity and in recession is unlikely to be better than inflation, if that.

  5. Or is that ” rooted to the spot”?

    All I see lately is money (acess to credit) talkess and others walk.

    So called higher prices on lower volumes always calls for respect of due diligence.

    The great danger is DT’s expose of hypothication and re-hypothication et al as well as the warning bells on MB Bloggers sans all.

    Choice of staying or rooted to the spot is the question?