The average length of ownership for residential properties is continuing to increase indicating that home owners are moving less frequently.
An important figure to be aware of is the average length of property ownership, or the ‘hold period’ of a property. The typical hold period provides one of the best indicators about the likelihood as to whether a property will be brought to the market in the near future. RP Data measures the average hold period by looking at sales over the past year and determining the length of time each of those properties had been owned (ie the most recent contract date minus the previous purchase date).
Across the combined capital cities, the average hold period for houses was recorded at 10.1 years at the end of 2013 and for units it was 8.4 years. In regional markets, the average hold period was slightly shorter for houses at 9.5 years and slightly longer for units at 8.6 years. The first chart highlights what has been a consistent increase in the average hold period since about 2004/05. The rise coincides with the national surge in home values from 2001 to 2004 and the subsequent fall in sales volumes thereafter.
Across the individual capital city housing markets you can see that the average hold period has trended higher across each market over the past decade. The data also shows that houses in particular tend to be held for much longer in Sydney and Melbourne than they do elsewhere.
At the end of 2013, Melbourne had the longest average hold period for houses and units recorded at 11.4 years and 9.4 years respectively. Sydney houses had the second longest average hold period at 11.0 years whilst for units Hobart units were second longest on average at 8.5 years. Each capital city has recorded an increase in the average hold period for houses and units over the past year.
Looking at the council areas with the longest average hold period for houses, the list is dominated by New South Wales and Victoria with Auburn in Sydney having the longest average hold period at 15.5 years. The areas listed are largely situated within the capital cities. For units, once again the list is dominated by New South Wales and Victoria however, most of these areas are situated outside of the capital city.
Looking at the regions with the shortest average hold period, Western Australia dominates the list for houses and a Queensland is most prevalent for units. Weipa in Far North Queensland has the shortest average hold period for both houses and units at 5.3 years for houses and 3.3 years for units. The regions with the shortest average hold period are typically found outside of the capital cities.
The data shows that the typical hold period is increasing. With property values rising and the subsequent transactional cost of buying and selling properties also rising it is no wonder home owners are choosing to move home on a less regular basis. The cost of agency fees and stamp duty acts as a disincentive to buy and sell property. Over the coming year we would expect that the trend towards longer period of home ownership will continue to be evident.
Article by RP Data senior research analyst, Cameron Kusher