Key takeaways
Aussies are moving house less frequently.
The median tenure for a house is nine years and for a unit, eight years.
Last year's decrease in prices might have made people delay selling their homes.
Based on Domain's research, people tend to own houses for longer than units in most cities and regional areas, except for Hobart, Melbourne, and specific markets in South Australia, Western Australia, and Tasmania.
In cities like Sydney, Brisbane, and Canberra, there is a significant gap in tenure between houses and units. This could mean that units serve as a stepping stone to homeownership.
Over the years, the trend for profitable unit resales has been gradually decreasing, although it has had some ups and downs. This could be influenced by housing preferences, development cycles, and the fact that units are typically held for a shorter period.
Domain noted that the median gain on resales remains substantial across all capital cities and regional Australia, with Sydney standing out as having one of the most significant shifts, with a higher proportion of loss-making resales compared to previous years.
Aussies are moving house less frequently.
The median tenure for a house is nine years and for a unit, eight years, according to Domain's latest Tenure and Profit Report,
Last year's decrease in prices might have made people delay selling their homes.
However, the trend of longer tenure (how long you stay put in a property) has been on the rise for the past two decades, even before those recent price drops.
Property price cycles can be a lever in driving tenure higher or lower because homeowners will delay or speed up selling decisions based on whether they think they can earn more or less if they hold on for longer.
Over time, tenure has gradually lengthened, which is more evident for houses than units.
Tenure - the capital city picture
According to Domain's data, in several cities like Sydney, Perth, and Canberra, the average house tenure is around 10 years, while it's nine years in Melbourne, Brisbane, and Adelaide.
Sydney's longer tenure can be attributed to housing affordability challenges and transaction costs, which discourage people from moving to homes that better fit their needs. Importantly, reduced housing mobility can affect workforce mobility and productivity.
Darwin stands out with the longest house tenure, at 12 years, while Hobart has the shortest, at just seven years.
In Hobart and regional Tasmania, property owners tend to hold onto their homes for even shorter periods, around seven and six years, respectively.
| Area | Houses | Units | ||||||
| 2023 | 2022 | 2018 | 2013 | 2023 | 2022 | 2018 | 2013 | |
| Sydney | 10yrs | 9yrs | 9yrs | 8yrs | 8yrs | 8yrs | 6yrs | 6yrs |
| Melbourne | 9yrs | 9yrs | 9yrs | 8yrs | 9yrs | 9yrs | 8yrs | 8yrs |
| Brisbane | 9yrs | 9yrs | 9yrs | 8yrs | 7yrs | 7yrs | 8yrs | 6yrs |
| Adelaide | 9yrs | 9yrs | 8yrs | 7yrs | 8yrs | 8yrs | 9yrs | 7yrs |
| Perth | 10yrs | 9yrs | 9yrs | 7yrs | 9yrs | 9yrs | 10yrs | 7yrs |
| Canberra | 10yrs | 10yrs | 9yrs | 8yrs | 6yrs | 7yrs | 8yrs | 6yrs |
| Hobart | 7yrs | 7yrs | 7yrs | 6yrs | 7yrs | 6yrs | 7yrs | 5yrs |
| Darwin | 12yrs | 12yrs | 11yrs | 7yrs | 11yrs | 11yrs | 11yrs | 6yrs |
| Reg NSW | 8yrs | 8yrs | 8yrs | 7yrs | 7yrs | 7yrs | 7yrs | 7yrs |
| Reg Vic | 8yrs | 8yrs | 8yrs | 8yrs | 11yrs | 11yrs | 10yrs | 9yrs |
| Reg Qld | 9yrs | 10yrs | 9yrs | 7yrs | 7yrs | 7yrs | 8yrs | 7yrs |
| Reg SA | 9yrs | 10yrs | 9yrs | 7yrs | 9yrs | 10yrs | 9yrs | 7yrs |
| Reg WA | 10yrs | 10yrs | 10yrs | 7yrs | 10yrs | 9yrs | 8yrs | 7yrs |
| Reg Tas | 6yrs | 7yrs | 7yrs | 5yrs | 6yrs | 6yrs | 8yrs | 5yrs |
| Reg NT | 13yrs | 12yrs | 11yrs | 7yrs | 10yrs | 10yrs | 9yrs | 6yrs |
| Australia | 9yrs | 9yrs | 9yrs | 7yrs | 8yrs | 8yrs | 8yrs | 6yrs |
This implies that homes in Hobart were initially purchased in 2016 and have seen substantial price growth since then, with house prices rising by 102% and units by 85%.
Tenure - houses vs units
Based on Domain's research, there's a noticeable difference in how long people tend to own houses compared to units in most cities and regional areas, except for Hobart, Melbourne, and specific markets in South Australia, Western Australia, and Tasmania (as shown in figure 2).
Typically, houses have longer ownership durations than units.
This pattern suggests that many individuals use units as a starting point for homeownership or that there's a higher turnover of investment properties, particularly in the form of units.
In cities like Sydney, Brisbane, and Canberra, there's a significant gap in tenure between houses and units.
These cities have substantial price differences between houses and units, which could mean that units serve as a stepping stone to homeownership.
Alternatively, it might indicate that a wide variety of units are available, leading to more frequent upgrades within this property type.
For instance, looking at Sydney's median tenure implies that houses were typically purchased around 2013, and their prices have increased by 122% since then.
In contrast, units were purchased around 2015, and their prices have only gone up by 11%.
Why are we moving less often?
Domain research suggests that owning homes for longer and moving less often can indicate:
- Homes are better matched, and buyers get their dream home or location on the first go. They are “forever home” areas, offering a mix of the dream home, lifestyle on offer, location, amenities, school catchment area, and everything in between. Making existing homeowners unwilling to sell and leave.
- Transactional costs associated with moving are too high, e.g. stamp duty. It can distort our housing decisions and be a disincentive to move. The financial burden of stamp duty can be linked to people’s willingness to change homes to suit their current needs.
- Housing mobility is low – which means we stay in our current homes without regard for our needs because that is all we can afford. It can hinder the mobility and productivity of our workforce.
- There is a lack of suitable housing available, e.g. downsizers who want to stay within the location they are familiar with.
- Our home is our castle. The emotional aspects that keep us tied to our homes for longer.
However, just because tenure is lengthening does not mean people move in and never want to leave.
It could mean:
- They want to stay in the same area, and there’s nothing available.
- They want to upgrade, but moving or upsize costs are too high and they opt to renovate/extend instead.
- There are limited job opportunities, so demand is only driven by natural population increases – particularly in some regional areas.
Tenure - localised picture
Domain's data shows that areas with longer tenure typically have higher prices and because the homes are pricier, they have often earned the largest built in profits.
For example:
- In Sydney, houses in Strathfield-Burwood-Ashfield have one of the longest ownership lengths in Australia at 13 years (table 2). Its median house price is $4.3 million – the seventh priciest area in Australia.
- In Melbourne, Whitehorse East and West have the longest tenure in the city at 13 years, with a median house price of $1.2 million and $1.4 million (above Melbourne’s overall median).
- In Brisbane, Centenary and Sunnybank houses have the city’s longest tenures, at 14 and 13 years respectively. The current median house prices there are slightly higher than the overall Brisbane figure. So, while they may not be the most expensive areas, they are family heartlands, attracting growing broods who are in it for the longer haul.
- In Perth, houses in Joondalup have the longest tenure at 11 years – it is WA’s fifth most expensive area. While units in Swan in Perth’s north-east are the third cheapest area and have the shortest tenure at six years.
| State | Shortest | Longest | ||
| City | Regional | City | Regional | |
| NSW | Blacktown – North, Units, 4yrs | Snowy Mountains, Units, 6yrs | Strathfield – Burwood – Ashfield, Houses, 13 yrs | Broken Hill And Far West, Houses, 11yrs |
| NSW | Rouse Hill – McGraths Hill, Houses, 6yrs | Clarence Valley, Units, 6yrs | Auburn, Houses, 13yrs | Bourke – Cobar – Coonamble, Houses, 11yrs |
| VIC | Cardinia, Houses, 7 yrs | Barwon – West, Houses, 7yrs | Whitehorse – East, Houses, 13yrs | Surf Coast – Bellarine Peninsula, Units, 13yrs |
| VIC | Wyndham, Houses, 7yrs | Baw Baw, Houses, 7 yrs | Whitehorse – West, Houses, 13 yrs | Bendigo, Units, 13yrs |
| QLD | Cleveland – Stradbroke, Units, 4yrs | Ormeau – Oxenford, Units, 4yrs | Centenary, Houses, 14yrs | Biloela, Houses, 14yrs |
| QLD | Wynnum – Manly, Units, 5yrs | Noosa, Units 5yrs | Sunnybank, Houses, 13yrs | Innisfail – Cassowary Coast, Houses, 13yrs |
| SA | Adelaide Hills, Units, 6yrs | Limestone Coast, Units, 7yrs | Port Adelaide – West, Units, 11yrs | Outback – North & East, Houses, 12yrs |
| SA | Adelaide City, Units, 6yrs | Fleurieu – Kangaroo Island, Houses, 8yrs | Mitcham, Units, 10yrs | Eyre Penninsula & SW, Houses, 11yrs |
| WA | Swan, Units, 6yrs | East Pilbara, Houses, 6yrs | Joodalup, Houses, 11yrs | Goldfields, Units, 15yrs |
| WA | Serpentine – Jarrahdale, Houses, 8yrs | Augusta – Margaret River – Busselton, Houses, 8yrs | Canning, Houses, 11yrs | Mid West, Units, 14yrs |
| ACT | Woden Valley, Units, 6yrs | – | North Canberra, Houses, 12yrs | – |
| ACT | North Canberra, Units, 6yrs | – | Tuggeranong, Houses, 12yrs | – |
| NT | Palmerston, Houses, 11yrs | Alice Springs, Units, 10yrs | Litchfield, Houses, 13yrs | Daly – Tiwi – West Arnhem, Houses, 16yrs |
| NT | Darwin City, Units, 11yrs | Alice Springs, Houses, 11yrs | Darwin Suburbs, Houses, 13yrs | Barkly, Houses, 12yrs |
| TAS | Brighton, Houses, 5yrs | Devonport, Houses, 5yrs | Hobart Inner, Houses, 8yrs | South East Coast, Houses, 7yrs |
| TAS | Hobart – South & West, Units, 5yrs | Huon – Bruny Island, Houses, 6yrs | Hobert Inner, Units, 8yrs | Launceston, Houses, 7yrs |
Shorter tenure periods are typically found in regions where housing is more affordable.
This can happen for various reasons:
- These areas often have a consistent housing supply.
- There's a higher rate of people moving in and out.
- A larger portion of the properties might be investments or bought by first-time homeowners.
- The population tends to be more mobile.
Places with shorter tenure usually have a younger demographic.
These are markets where it's easier to get into homeownership, but people often plan to move up to larger homes relatively soon.
As their families grow, they look for bigger houses, and this opens the door for new families to enter the market.
The cycle repeats as time goes on, with family income increasing or preferences changing, prompting both a move to a bigger place and a potential change in location.
In contrast, longer tenures are often seen in regions with more affluent populations, typically a bit older, and less likely to move anytime soon.
As people age, their household size tends to remain stable.
This could be because they have school-aged children tied to a specific school zone, making them committed to staying put for years, or because their kids have become young adults who are about to move out (or maybe they've moved back in to save for their own first homes).
Profit - the big picture
Domain's research noted that while the proportion of profit-making resales fluctuates – it remains the lion’s share of resales – historically it persistently lands above 90% (Figures 3a and 3b).
Today, 97.8% of houses resell at a profit and 91.7% of units.
Several factors can influence the likelihood of making a profit when selling a property, especially when selling it before the home's value has increased significantly.
- Also read:Boom to bust: What makes property prices rise and fall
- Also read:Latest property price forecasts for 2024 revealed. What’s ahead in our housing markets in the next year or two?
- Also read:This week’s Australian Property Market Update – Latest Data, State by State May 7th 2024
- Also read:Melbourne property market forecast for 2024
- Also read:Sydney property market forecast for 2024
This might happen because the homeowner is facing financial difficulties, which makes them a distressed seller.
Profitable resales of houses and units are closely linked to price trends.
When property prices are on the rise, there's a higher chance of selling at a profit.
This connection between price increases and profitable resales is more noticeable for houses than for units. Over the years, the trend for profitable unit resales has been gradually decreasing, although it has had some ups and downs.
Twenty years ago, approximately 96.7% of units were sold for a profit, and now it's around 91.7%.
For houses, about 97.4% were sold for a profit in 2003, and that number has remained relatively stable at around 97.8% today.
This could be influenced by housing preferences, development cycles, and the fact that units are typically held for a shorter period.
Additionally, the combined prices of houses in major cities have surged by 209% in the past two decades, whereas unit prices have only increased by 121%.
Profit - the city picture
Domain's data show that most resales across our capital cities made a profit in 2023 (table 3).
|
Area
|
Profit
|
Loss
|
Change in profit making sales (percentage point) | ||
|
1yr
|
5yrs
|
10yrs
|
|||
| Sydney | 95.1% | 4.9% | -1.7% | -3.3% | -2.6% |
| Melbourne | 94.6% | 5.4% | -1.8% | -3.0% | -2.1% |
| Brisbane | 98.3% | 1.7% | 0.2% | 3.7% | 6.3% |
| Adelaide | 99.2% | 0.8% | 0.2% | 3.6% | 5.8% |
| Perth | 93.9% | 6.1% | 0.7% | 10.9% | -2.9% |
| Canberra | 99.4% | 0.6% | -0.2% | 3.6% | 2.5% |
| Hobart | 99.2% | 0.8% | -0.5% | -0.2% | 18.8% |
| Darwin | 84.9% | 15.1% | -3.2% | 0.1% | -14.2% |
| Reg NSW | 98.9% | 1.1% | -0.6% | 1.0% | 6.4% |
| Reg Vic | 99.3% | 0.7% | -0.5% | 1.6% | 3.3% |
| Reg Qld | 96.4% | 3.6% | 0.6% | 6.1% | 8.5% |
| Reg SA | 97.2% | 2.8% | 0.5% | 9.5% | 7.9% |
| Reg WA | 92.5% | 7.5% | 1.2% | 12.9% | 3.2% |
| Reg Tas | 99.1% | 0.9% | -0.5% | 6.7% | 22.9% |
| Reg NT | 92.8% | 7.2% | -0.5% | 0.7% | -4.4% |
| Australia | 96.3% | 3.7% | -0.3% | 2.0% | 2.0% |
Smaller capital cities like Canberra, Adelaide, and Hobart have experienced a higher percentage of profitable property resales.
In Adelaide, the proportion of resales resulting in a profit has almost reached 100%, which is not surprising considering the city's strong and consistent price growth.
Adelaide is currently the only city with record-high prices for both houses and units.
Canberra and Hobart have also seen over 99% of their resales being profitable.
These two cities are somewhat unique in that they were slower to reach their lowest price point compared to other cities like Sydney and parts of Melbourne.
However, Hobart, in particular, remains more affordable than Sydney, and Canberra's higher average income levels may make it easier for homeowners to meet their mortgage obligations.
As a result, many property owners in these cities have held onto their properties for a long time, navigating through multiple price cycles.
In contrast, Adelaide, Perth, and Brisbane have seen an annual increase in profitable resales, in line with the current record-high prices.
On the other hand, Sydney, Melbourne, and Darwin have experienced the most significant decline in the percentage of profitable resales on an annual basis.
Sydney stands out as having one of the most significant shifts, with a higher proportion of loss-making resales compared to previous years.
This shift reflects the current stage of the property cycle, with house prices well into their recovery phase and unit prices halfway through theirs.
These market dynamics may have contributed to some property sellers in Sydney facing losses when selling their homes.
Domain also noted that the median gain on resales remains substantial across all capital cities and regional Australia (table 4).
| Area | Houses | Units | ||||||
| 2023 | 2022 | 2018 | 2013 | 2023 | 2022 | 2018 | 2013 | |
| Sydney | $410,000 | $455,000 | $368,500 | $142,500 | $127,000 | $191,000 | $245,000 | $95,000 |
| Melbourne | $327,000 | $375,000 | $327,600 | $186,500 | $80,000 | $131,000 | $150,331 | $133,000 |
| Brisbane | $315,000 | $305,000 | $130,000 | $102,000 | $87,400 | $58,000 | $17,000 | $45,000 |
| Adelaide | $235,000 | $190,000 | $76,500 | $79,500 | $110,000 | $75,000 | $44,000 | $60,000 |
| Perth | $120,000 | $95,000 | $55,000 | $140,000 | $36,000 | $35,000 | $42,000 | $114,000 |
| Canberra | $409,550 | $463,500 | $211,000 | $181,000 | $150,000 | $134,500 | $45,000 | $87,000 |
| Hobart | $305,000 | $336,250 | $112,500 | $30,000 | $220,000 | $250,000 | $95,000 | $20,000 |
| Darwin | $145,000 | $175,500 | $116,807 | $297,500 | $0 | -$5,000 | $0 | $142,250 |
| Reg NSW | $285,000 | $285,000 | $138,528 | $65,000 | $192,500 | $195,000 | $94,000 | $31,550 |
| Reg Vic | $239,000 | $247,000 | $100,000 | $78,000 | $175,000 | $170,000 | $76,500 | $68,000 |
| Reg Qld | $190,750 | $172,910 | $90,000 | $63,500 | $159,000 | $133,000 | $48,000 | $0 |
| Reg SA | $110,000 | $73,000 | $24,000 | $35,000 | $90,000 | $57,500 | $15,750 | $15,000 |
| Reg WA | $90,000 | $70,000 | $10,000 | $89,500 | $50,000 | $45,100 | $0 | $60,000 |
| Reg Tas | $215,000 | $215,000 | $41,000 | $20,000 | $143,000 | $145,000 | $24,500 | $7,500 |
| Reg NT | $117,500 | $100,000 | $86,750 | $165,000 | $37,000 | $35,025 | $52,500 | $120,000 |
| Australia | $245,000 | $250,000 | $160,200 | $108,500 | $115,000 | $123,000 | $110,000 | $77,500 |
In terms of houses, Sydney recorded the highest median dollar gain, with an increase of $410,000, followed closely by Canberra at $409,550, and Melbourne at $327,000.
For units, Hobart had the best returns on resales, with an increase of $220,000, followed by regional areas in New South Wales (NSW) at $192,500 and regional Victoria at $175,000.
Notably, in NSW, Victoria, and Queensland, regional unit markets outperformed their respective capital cities.
The gains for units in regional Victoria were more than double those of units in Melbourne.
This trend highlights the significant population shifts to regional areas during the pandemic, leading to increased demand and rising prices in these attractive lifestyle locations.
Profitability decreased in several cities compared to the previous year.
This decline was observed in both houses and units in Sydney, Melbourne, and Hobart, as well as houses in Canberra and Darwin.
In these areas, property prices are still below their previous peak levels. As prices continue to recover, we can expect profitability to improve as more property resales yield positive or higher returns compared to their initial purchase prices.
The overall level of profitability is also influenced by the higher occurrence of loss-making property sales in these cities.
Additionally, houses in regional Victoria and units in regional areas of New South Wales (NSW) and Tasmania also experienced a yearly decline in profitability.
Outlook
Australia's housing markets are intricate, with multiple property cycles occurring simultaneously.
While it's natural for home owners to aim for buying at a low point and selling at a high point, the complexities of various submarkets across the country and the unique characteristics of individual properties make it challenging to predict.
The percentage of property resales resulting in profits remains high and is anticipated to continue as Australia's housing market recovers.
However, in certain specific areas, some motivated sellers may be more inclined to accept a loss due to increased debt costs.
Nevertheless, as property prices increase, the likelihood of such losses decreases.
In the end, overall profitability is expected to remain strong, aligning with the current upward trend in prices and our forecasts.
