Australia’s property market is moving onto the next phase of the cycle, but issues with scarce supply continue to strain the market.
It’s not good news then that new data has revealed that homeowners are holding onto their properties for longer than ever before, only exacerbating an already tight market.
A recent analysis of PropTrack data shows that the average period of ownership of a property in Australia has lengthened to around 11 years, which represents a whopping 23% increase over the past 10 years.
So with many properties only coming on the market once per decade (or longer), it’s easy to see why supply is so tight.
But there are some suburbs where holding periods are even longer, some at double the national average, with infrastructure improvements, demographic upgrades, or established communities giving people little reason to sell up and leave.
The top 10 most tightly held suburbs for houses are concentrated in NSW and Victoria.
In first place, with an average hold period of 24.4 years, is Clarinda in Melbourne’s south-east.
The suburb benefits from good proximity to local shops, amenities, and primary schools and offers relative affordability compared to similar suburbs, making it popular with young families and older homeowners who have lived there for most of their lives.
In second place is Vermont South, also in Victoria around 26km east of Melbourne’s CBD with an average hold time of 22.3 years.
Sydney’s most tightly held suburb for houses, coming in third place on the national list, is Arncliffe in Sydney’s south where homeowners hold onto their properties for 21.2 years on average.
When it comes to the most tightly held suburbs for units, 6 out of the top 10 are located in NSW.
Cremorne Point and Kirribilli, waterfront suburbs on Sydney Harbour, are the suburbs with Australia's longest hold times for units, at 17.2 and 16.1 years respectively.
In fact, when it comes to units, proximity to water is a common feature among many of the most tightly held suburbs.
Narwee in southern Sydney comes in third place with an average hold time of 15.9 years.
Minyama on the Sunshine Coast comes in 5th place, topping the list in Queensland while Perth’s most tightly held suburb, Shelley, on the Canning River, comes in 6th place for units.
The most tightly held suburbs tend to be those that appeal to a wide range of different people, from young families to retirees, and are often located in the middle and outer suburban rings, PropTrack economist Anne Flaherty explains.
"They tend to have excellent amenities, such as schools and shops, as well as lifestyle attributes such as parks or being close to the water.
Many also benefit from being well serviced by road and rail networks which enable access to cities and employment hubs.
For buyers looking to move into these tightly held suburbs, opportunities are scarce, and there’s often high levels of competition."
Properties in these suburbs also tend to be freestanding houses, often originally built between the 1950s and 1990s, and are usually low-rise or medium-density unit complexes such as townhouses, villas, or duplexes.
Well-regarded school zones, particularly high schools, are also a strong drawcard for family buyers looking to stay in the area for an extended period of time.
Higher property prices across the country have also prompted many homeowners to hold onto their property for longer than maybe initially planned, with upgrades pushed further down the pipeline thanks to cost concerns.
Meanwhile, in some of these areas, government incentives such as tax-exempt super contributions may not be sufficient to encourage older homeowners to downsize in order to free up housing stock.
Suburbs with the longest hold times tend to be found in Sydney and Melbourne, where properties are held for an average of about 12 years, slightly longer than the national average.
Flaherty explains that this is largely because Sydney and Melbourne are where the bulk of employment is in Australia, so the populations are often less transient, particularly when you go to the middle and outer suburban areas.
At the same time, high stamp duty costs in the two states discourage many homeowners from buying and selling often and result in them staying put instead.
The flip side of the data on the most tightly held suburbs is also interesting - the suburbs where properties sell and change hands the quickest.
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Many of these suburbs tend to be in newly established areas and regional suburbs where large developments and younger homeowners tend to move on quickly and in larger numbers.
Significant property price increases since the onset of the pandemic, driven by increased demand from tree-changers, also prompted some owners to sell and upgrade quickly, while others were motivated to sell by rising interest rates or a desire to return to the city.
For houses, the top three suburbs with the fastest turnover of owners were all in Queensland.
Pimpama, Lammermoor, and Maudsland each have an average hold time for houses of 4.4, 4.7, and 5.1 years respectively.
In Victoria, Officer which is 48km south-east of Melbourne’s CBD, has a hold time of just 5.2 years which puts the suburb in 4th place on the national list.
For units, Hope Island on Queensland’s Gold Coast is the clear winner, with the shortest average hold time of just 4.5 years for its units.
The suburb is far ahead of Casuarina (NSW) and Scarness (QLD) where average hold times are both 5.6 years, putting the two suburbs in second and third place on the list.
As always, these tightly-held suburbs aren’t necessarily the suburbs I would recommend investing in.
That’s because when it comes to property investment, it's most important to look for an investment-grade property in the ‘right area’ rather than chasing ‘top hotspot’ or growth areas.
But even before looking for the right location, make sure you have a Strategic Property Plan to steer you through the upcoming challenging times our property markets will encounter.
You see…property investing is a process, not an event.
Things have to be done in the right order – and selecting the location and the right property in that location comes right at the end of the process.
The fact is, the property you will eventually buy will be the result of a sequence of questions you will need to ask and answer and a series of decisions you’ll need to make before you even start looking at locations.
Long before we talk about a property or the right location with our clients at Metropole, we look at factors including their age, their timeframes, and the desired end results in other words, what do they really want the properties to do – are they looking for cash flow, capital growth, or a combination of both.
And that’s because what makes a great investment property for me, is not likely to be the same as what would suit your investment needs.