Australian home owners holding on to their homes for longer.
At the end of 2012, the average length of ownership for those properties sold over the year was 9.3 years for houses and 8.2 years for units.
The average hold period is a simple calculation that looks at the difference between the date of previous purchase and compares it to the most recent sale.
Of those houses and units sold over 2012, the average hold period at a national level was 9.3 years for a house and 8.2 years for a unit. Ten years ago, the average hold period for a house was 6.8 years and for a unit it was 5.9 years.
As the first chart shows, there has been a sharp rise in the length of time homes have been held for over recent years.
The rise in the average hold period has been ongoing since late 2004 which is virtually the same time period as the number of home sales began to decline coming out of the property boom between 2001 and 2004. The increase in hold period is logical when you consider the decline in sales and the fact that the population has continued to grow.
When you consider that home values have risen and subsequently transaction costs such as agent commissions and stamp duty have also risen, it is clear there is a disincentive for home owners to move on a more regular basis.
Across the individual capital cities, the trend towards a longer average hold period is also evident.
At the end of 2012, Melbourne had the longest average hold period across the capital cities for houses and units at 10.8 years and 9.2 years respectively.
Sydney homes had the second longest average hold period for houses (10.1 years) and units (8.2 years).
As the table shows, the average hold period has increased over the past year in each city and across both property types.
In comparison to average hold periods ten years ago, there has been a significant increase across each capital city. Again, this is a response to declining levels of sales transactions and rising values which increases the cost of purchasing and selling homes.
Across individual council areas, the West Wimmera council area in Victoria had the nation’s longest average hold period over the year at 14.7 years for houses.
For units, Colac-Otway in Victoria had the longest average hold period at 12.9 years.
Non-capital city areas of Victoria dominate the list for both houses and units in terms of the regions with the longest average hold period.
This highlights the fact that Victorian’s tend to hold their homes for a longer period of time it probably also reflects the fact that rates of stamp duty in Victoria are generally higher than those in other states which acts as a further disincentive to sell if you have to re-purchase.
The regions which have typically had the shortest average hold period are mainly those areas associated with the mining and resources sector.
Port Hedland in Western Australia was the council area with the nation’s shortest average hold period for houses (4.4 years) and Weipa in Far North Queensland had the shortest hold period for units (3.4 years).
Overall, the data highlights that there has been a sharp increase in the average hold period over recent years.
The increase has come at the same time as a decline in sales volumes and highlights the challenges of relatively high home values, particularly in capital cities.
Stamp duty charges and the higher cost of agency commission as values rise acts as a disincentive for home owners to buy and sell property on a more regular basis. This also provides additional challenges for state Government stamp duty revenues.