CoreLogic’s research analyst, Cameron Kusher, has released data showing that the average number of years that Australians hold onto their properties has ballooned to an all-time high:
The latest data to May 2019 shows that home owners are holding onto their property for much longer than they were 10 to 15 years ago. The average hold period has consistently increased since 2005 across both house and units nationally. The average hold period figure is based on sales from the past year, using the latest sold date and the previous sold date to establish how many years a property has been held for between each transaction. Nationally, the average length of home ownership currently sits at 11.3 years for houses and 9.6 years for units, this is an increase of 3.8 years for houses and 2.9 years for units over the past 10 years.
Across the individual capital cities, the average hold period of both houses and units has risen over the last 10 years, 5 years and year, with houses on average being held longer relative to units across all capital cities. Over the last year, houses in Melbourne recorded the longest period of ownership at an average of 12.5 years, while Perth came in with the longest average hold period of 10.8 years for units. At the opposite end of the spectrum, houses in Darwin are typically being held for 9.2 years and Canberra units on average 8.7 years; the shortest average hold period across the capital cities.
Compared to ten years ago, Sydney recorded the longest average hold periods for both houses and units at 9 and 7.3 years respectively, since then Melbourne houses have consistently seen the longest hold period, while results have been varied across the unit market…
The data suggest that home owners are much more reluctant to sell their property than they were a decade ago which is also highlighted by the ongoing decline in sales transactions. Other factors such as the rising cost of selling and purchasing property, combined with affordability constraints across some Australia’s more expensive capital cities contribute to owners holding onto their properties longer. It’s expected that this trend will continue over the coming years given such concerns aren’t likely to see much improvement in the near future.
The longer holding periods are likely to adversely affect those areas of the economy reliant on housing turnover, but positively impact the home renovation market. In particular:
- There is less stamp duty collected by local and state governments because of fewer sales transactions.
- There is less commission available for real estate agents and mortgage brokers.
- There is less new business for financial institutions; as a result they have to compete more heavily in the refinance space.
- Many families are likely to be living in homes which don’t appropriately meet their needs.
- The data suggests that, instead of moving, people are looking to renovate their current homes.