How long do property owners stay put? | Michael Matusik

We believe that residential property is a long-term investment.

We base our beliefs on proof, not some want or glib suggestion.

ABS statistics show that owners with a mortgage in Australia hold a property on average for eight years.

For those lucky enough to own a dwelling outright, the average length between digs is 18 years & for those renting, most move every 18 months or so.

And how long does the typical Australian investor hold a property?

Well, the answer is not nearly long enough.

Research from RPData shows that very few sellers make a profit unless they hold a property for a complete cycle – typically seven to eight years.

In fact, their research shows that it is only by holding an investment for two cycles (over 15 years) that the vast majority of buyers have any real chance of making a capital gain.

Interestingly, holding a property for less than one cycle – regardless of whether it is one year or, say, five – makes little difference when it comes to the likelihood of a buyer making a gross profit on resale.

Also, the results – with the exception of Sydney – vary little between state, city or region.

In essence, regardless of location, the best chance to make a capital gain when it comes to residential property is to hold for decades, not years.

It is a “get wealthier, slow scheme”.

Of course, these RPData results are based on gross profit i.e. reselling the same property for more than the original amount of money paid.

It does not take into consideration any costs, including renovations, nor any income earned, such as rent, tax credits or depreciation allowance, for example.

Again, we believe that residential property is a long-term investment.

Those who are saying that you can profit quickly by investing in property are very unlikely to have any real evidence behind their claims.

Ask them to supply some proof.

Watch them squirm.