Many potential buyers are struggling to find a residential property due to a lot of factors, but these days, it’s because of the lack of for sale properties—as in, no one is selling. According to recent reports, homeowners are holding onto their properties longer than expected. Why is this happening? Let’s find out.
Recent updates released pointed out that the average hold among homeowners across house and units nationally have consistently increased since the year 2005. Homeowners are more unwilling to sell their houses compared to the homeowners 10 years ago. This is due to the ongoing decline in sales transactions. Additionally, data shows that the average length of homeowners holding onto their properties is about 11.3 years, which is about 3.8 years longer a decade prior.
In terms of apartments, the average hold is 9.6 years which is about 3 years longer ten years ago.
So what are other contributing factors for this increase?
Many experts are including the rise in buying and selling a property. A few months ago, we have talked about stamp duty. Stamp duty is taxes one must pay when buying a property and because of this, homeowners are forced to pay tens of thousands of dollars on top of the property price. It has become such a huge deal over the years especially in the main states like Sydney and Melbourne over the years. The stamp duty has made it even harder for buyers to purchase property, thus holding onto their properties longer.
For years now, many are calling for the scrapping of the stamp duty because of its added burden to many buyers. It has been said to have tripled its price since 2004 which is an insane amount. Instead, they are lobbying the government to have it replaced with a land tax.
In terms of affordability, studies show that it has improved slightly due to the price falls that took place this year. The price falls that took place in Sydney and Melbourne have made a positive effect on those wanting to buy houses especially because these two are considered the two most expensive cities in the country. Unfortunately, the prices have bounced back meaning, the price falls have halted.
I have mentioned before that the Reserve Bank of Australia decided to cut down the interest rate to below 1% which has pros and cons. This interest rate drop could potentially keep the prices up making it more difficult to attract buyers.
So which areas hold their houses the longest?
The areas with the longest periods of homeownership include Melbourne and Sydney—the two most expensive cities. The average period of homeownership is 12.5 years. In terms of houses, Monash in Melbourne with an average holding period of 17 years while Queenscliffe and Whitehorse are both at 16 years.
Next is Perth, with an average holding period of 11 years.
As far as units are concerned, Western Australia has the longest hold period with Armidale in Perth and Swan Hill in Victoria both at average 13.4 years.