Why Aussie homeowners are holding property longer than a decade ago

Australian homeowners are holding onto their properties for longer than they were a decade ago and it’s not necessarily because they are comfortable. Experts say rising house prices and transactional costs as well as an ageing population are key reasons why Australians are staying put for longer. 

A new analysis by realestate.com.au shows the average hold time across both houses and units is 2.6 years longer than it was 10 years ago, currently 10.6 years for houses (8.0 years in 2010) and 9.5 years for units (6.9 years in 2010).

• Use the interactive below to discover the average hold period for properties in your suburb

Realestate.com.au’s executive manager of economic research Cameron Kusher said the upward trend in hold times comes down to the fact that moving home is expensive.

“Property prices are so high now, and the costs associated with buying and selling properties are also high, which dissuade transactions wherever possible,” Mr Kusher said.

Program director for household finances at the Grattan Institute Brendan Coates said the rising burden of stamp duty is a clear driver for longer hold periods.

“[Stamp duty] is a really large cost now compared to the average wage [and] because house prices have risen relative to incomes over the last two decades – and the stamp duty rates obviously rise with prices – it means that Australians are spending a larger share of their average wage every time they change houses. So naturally that means that you do it less often,” Mr Coates said.

“Stamp duty rates have basically doubled [over the past 15 years] in Melbourne and Sydney. That’s a really enormous impost on households … It means people are probably living in housing that less suits their needs.”

On Tuesday, the NSW government announced a public consultation process to seek the community’s view on tax reform to reduce the upfront costs for home buyers. Under the plan, the community will be asked if they want the state’s stamp duty system overhauled to allow buyers to opt out of stamp duty and instead choose a smaller annual property tax.

NSW Treasurer Dominic Perrottet said the current stamp duty system was centuries old and in need of an overhaul to give NSW residents a modern tax system.

“This is a reform proposal for NSW where more people can own their home and have more freedom to choose the right property for their family at every stage of life,” Mr Perrottet said.

The NSW reform could be set in motion in the second half of 2021.

But for now, Mr Coates said many Australian home owners are choosing the more affordable option of renovating their homes to make them more suitable, rather than selling up and buying again.

He said Australia’s ageing population is another reason for a decline in property transactions compared to a decade ago.

“The average homeowner is older … older households have a tendency to move less frequently.”

Mr Kusher added that pensioners are particularly less inclined to move homes.

“Household wealth is underpinned by real estate assets so downsizing has become somewhat less attractive, especially considering it can impact on pension payments for retirees,” he said.

The realestate.com.au data showed average hold periods for houses in Australian capital cities increased steadily between February 2010 and August 2019, when they began levelling out in most cities, declining slightly in Melbourne and Sydney. It was a similar pattern for units although hold times levelled out in the two east coast capitals.

Mr Kusher said the drop-off was likely associated with a weaker housing market and subsequent price falls over recent years, as well as low borrowing costs.

“This may have encouraged people to move due to the lower mortgage costs despite the sale and purchase costs that they had to incur,” he said.

Hold periods for houses in all capital city regions except the ACT decreased in May 2020, shortly after COVID-19 lockdowns in Australia. Hold times for units in the ACT also increased but decreased everywhere else except in Melbourne, Sydney and Hobart where they remained steady.

Mr Kusher said the ongoing fall in mortgage rates, which have led to better mortgage serviceability, have likely driven more people to transact on homes in recent months.

The Aussie suburbs with the longest hold times

While Australian home owners are staying in their homes for longer, hold times vary wildly across the country.

The suburb with the longest hold time nationally was Taren Point in Sydney’s south with an average hold time of 22.7 years for houses. The longest hold time for units nationally was in Kew East in Melbourne with an average of 18.8 years.

Greg Gilbert, principal at Greg Gilbert Real Estate – Cronulla, said the reason why houses in Taren Point are so tightly-held is because the suburb is so small.

“Taren Point is just like a little peninsula – Holt Road is quite affable as far as waterfronts and water views and the other road is Woodlands Road. So, you’re only really down to two small areas. It’s a very tight little community there,” Mr Gilbert said.

Mr Gilbert is currently marketing the waterfront home at 34 Woodlands Road, Taren Point, and said the current owner has lived in the home for 42 years.

By stark contrast, the suburb with the shortest hold time for houses nationally was South Ripley in Brisbane with an average of 1.1 years. The shortest hold time for units was three years in Brisbane’s Redland Bay.

Mr Kusher said areas with abundant new housing tend to have very low hold periods while the more established inner and middle ring suburbs are more tightly held.

“If you think about it, new housing areas are often abundant in first and second-home buyers, many won’t live in those homes for the rest of their lives so after some price growth or some pay rises they quickly look to move on to another home,” he said

“Inner and middle-ring suburbs are more highly sought-after so generally people are less-inclined to sell in those areas.”

Looking city-by-city: In Sydney, Oran Park had the shortest average hold time for houses at 1.7 years, which was wildly different to Taren Point’s 22.7 years. The Sydney suburb with the longest average hold time for units was Eastlakes at 17.8 years while popular Kellyville had the shortest hold time for units at just 4.4 years.

In Melbourne, the inner northern suburb of Princes Hill was where houses were held for the longest period of time at 21.7 years compared to Melton West, which had the shortest hold time for houses at five years. For units, Kew East had the longest average hold time of 18.8 years while Laverton had the shortest at 3.7 years.

Arch Staver of Nelson Alexander – Fitzroy said there is a strong representation of academics as home owners in Princes Hill due to the suburb’s proximity to Melbourne University. However, he said it was also a beautiful area with tree-lined streets and historic value.

“[Princes Hill] reflects a lot of history in its architecture. There’s a scattering of Victorian cottages, there are grand double-fronted homes, there are representations of Queen Anne Revival and there’s also some significant mansions,” Mr Staver said.

“It more or less represents every demographic.”

Home owners in Brisbane’s Middle Park are holding onto their houses for longer than anywhere else in the city at an average of 18.4 years, a far cry from South Ripley’s 1.1 years for houses. The longest hold time for units was in Edens Landing at 14.5 years while the shortest hold time for units was in Redland Bay at three years.

Lauren Xing of Brisbane Real Estate – Indooroopilly said Middle Park attracted a lot of young families because it is a very family-oriented area.

“It’s not a big suburb, there are probably about 1600 homes there. It’s got everything, good schools and a convenient location,” Ms Xing said.

Ms Xing said there is a lot of demand for houses in Middle Park. She said the home she recently sold at 35 Scarba Street received multiple offers during its 21-day campaign.

“It is the best home in the area but it took me by surprise the level of interest we got.”

It’s important to note that some suburbs are so tightly held they don’t have enough data to calculate a hold period figure, which is based off a minimum 10 sales in the past 12 months. 

The suburbs where average hold times have increased the most

Some suburbs have been tightly held for decades while others have grown in popularity over the past 10 years.

While it doesn’t have the longest hold period nationally, Melbourne’s Princes Hill ranked at number one nationally for the largest growth in hold period over the past 10 years. In 2010, the average hold time in Princes Hill was 7.5 years but the figure now sits at 21.7 years – a 14.2 year difference.

Kingsville in Melbourne’s trendy Inner West had the biggest growth in hold times for units with owners holding onto units for 11 years longer than they were a decade ago.

Mr Kusher said looking at the data both nationally and state-by-state, many of the suburbs with the biggest shifts in hold times are ones that have become more popular over time.

“Many of the suburbs have become more sought-after over recent years, which is contributing to the longer hold periods,” he said.

Will hold times continue to grow in Australia?
Mr Coates said he suspects hold times for Australian property will continue to grow due to Australia’s ageing population. But he said the more concerning driver of longer hold times is the rising tax on transacting property – stamp duty.

“If the driver of lower turnover is just that you’ve got an older population and they don’t want to move as much, there’s nothing wrong with that. But when the driver looks like it’s a highly distorted tax [stamp duty] that is widely recognised by economists as being basically the most destructive tax that we have, then that’s a problem,” Mr Coates said.

Mr Kusher said looking at the data both nationally and state-by-state, many of the suburbs with the biggest shifts in hold times are ones that have become more popular over time.

“Many of the suburbs have become more sought-after over recent years, which is contributing to the longer hold periods,” he said.

Will hold times continue to grow in Australia?

Mr Coates said he suspects hold times for Australian property will continue to grow due to Australia’s ageing population. But he said the more concerning driver of longer hold times is the rising tax on transacting property – stamp duty.

“If the driver of lower turnover is just that you’ve got an older population and they don’t want to move as much, there’s nothing wrong with that. But when the driver looks like it’s a highly distorted tax [stamp duty] that is widely recognised by economists as being basically the most destructive tax that we have, then that’s a problem,” Mr Coates said.

Originally published as Why Aussie homeowners are holding property longer than a decade ago