Holding on

Australians are holding onto their houses for longer than ever, according to a recent article published by REA.

Analysis of PropTrack data shows that the average holding period for a property in Australia has increased by 23 percent to 11 years across Australia.

Melbournians hold on to their properties longer than the national average, at 12 years. 

Some suburbs are even more tightly held, for example, Clarinda with an average hold period of 24.4 years, or Mont Albert at 19.6 years.

This trend helps to explain why the total volume of sales has declined over the last decade. The longer people hold, the less frequently they sell, the less total transactions occur. 

This is especially true for Stonnington, where supply is restricted to existing dwellings and new detached homes are rarely built, aside from the occasional subdivision. 

You would assume that the biggest deterrent for people moving is stamp duty. 

At 5.5 percent of the value up to $2,000,000, and 6.5% above, the State Revenue Office pockets $155,000 for your “average” house in Armadale of $2,700,000 (the median house price in Armadale). 

That’s a significant amount of after tax income, even if you can afford to buy in the 10th most expensive suburb in Melbourne (currently). 

While stamp duty as a percentage has not increased (much) since 2008, property prices have at least doubled over that time, so stamp duty in absolute terms has also doubled.

When you consider that wages have only grown around 50 percent over the same period, the total burden of stamp duty has increased significantly. 

It’s unlikely that stamp duty will be reformed anytime soon so that friction of selling will remain.

Fortunately, money is not the only deterrent or motivator for people selling. Life happens. Birth, death, divorce… all very good reasons to move. And people seem to be on the move now.

Currently, we are seeing a healthy amount of stock on the market, with a relatively busy start to spring – busier than we were expecting this early. 

Clearance rates held up well on Saturday, with Jellis Craig achieving 81 percent across 85 auctions. 

Buyers seem to be spread out across more listings now, so inspection numbers have dropped off compared to a few weeks ago. Yet the results continue to be strong.

We will keep a close eye on clearance rates as auction volume starts to hit 100+ in the coming weeks.

Feature Property: 4 Densham Road, Armadale