Data shows that Australians are holding onto their homes for longer than they used to.
We take a look at what’s behind this trend and what it means if you’re looking to buy or sell a home.
Length of home ownership is rising
Data released by Corelogic shows people are holding onto their property for much longer than they once were.
As of May 2019, the average length of home ownership across Australia was 11.3 years for houses and 9.6 years for units. This represents an increase of 3.8 years for houses and 2.9 years for units, over just 10 years.
In Sydney, hold times are currently even higher – at 12.4 years for houses and 9.6 years for units and in the Eastern Suburbs of Sydney, this trend is also quite obvious.
In fact, one of our local suburbs, Randwick, has an average hold time of 15.7 years – making it number 17 on the list of longest hold times for houses across all of Australia.
Anecdotally, I personally have noticed a massive change in the length of time people are holding onto their homes since I began working in the Eastern Suburbs way back in 1992.
What’s the reason for longer home ownership?
In our experience talking to so many buyers and sellers across the East, we believe there are three main factors contributing to the trend of people staying put for longer.
- Rising house prices. Because housing is less affordable than it once was, people take longer to build equity or increase their home loan to “bridge the gap” between one property and the next.
- Increasing changeover costs. As prices rise stamp duty has become a real consideration when buying. For instance, a $3m home attracts stamp duty of more than $150,000.
- The popularity of renovations. We’re less afraid of doing serious structural work than we once were. When people are settled in a location they’re more inclined than ever to extend or renovate and upgrade their existing home so that it suits their lifestyle.
How length of ownership affects sales and stock levels
According to Corelogic, the increasing length of homeownership also correlates with a general ongoing decline in sales transactions.
Their estimates reveal there were 367,630 settled sales across the country for the twelve months until August 2019. This is 17% fewer sales than the year previously and approximately 30% fewer than the recent peak number of sales recorded in the year to September 2015.
Also according to Corelogic, currently advertised stock levels are around 15% lower than this time last year and total advertised stock levels are 8% lower than a year ago. Numbers have not been this low across the board for this time of the year since 2010.
What this means for buyers and sellers
At its core, the property market is all about supply and demand. When there are fewer properties on the market to meet demand, prices rise. When supply outstrips demand, prices fall.
At least that’s the theory, but in practice, factors such as market confidence, expectations about a fair price, access to credit and other considerations count too.
Right now, we’re seeing a longer hold time have a real impact on the changeover of properties. Downsizers often find there are few properties to meet their demands so they tend to stay put for longer, this means the market in family quality homes then suffers from limited supply and so it moves on.
That said, if you’re looking to sell and you have reasonable price expectations, you should generally expect that there will be buyers for your property, so long as you run a solid marketing campaign. The caveat, of course, is that you’ll also need to find somewhere to go.
If you’re looking to buy, prepare to put your best foot forward, stay open-minded and try to be a bit flexible. You may be surprised by what’s out there if you’re prepared to look just streets away from your preferred location. And you can always modify a home if it ticks most of the boxes but not all of them.
Sydney’s Eastern Suburbs Market Snapshot
A detailed annual assessment of the property market focusing on the Eastern Suburbs of Sydney, Australia.