Since 2005, there’s been an increasing trend in Australians staying put in their homes for longer. People are hanging on to houses for an average of 9 years and apartments for 7.7 years, according to new figures from RP Data. At the same time last year, the average hold period was 8.5 years for houses and 7.4 years for apartments.
So what’s going on?
First of all, let’s be frank. Moving house isn’t fun. It requires a lot of work and in today’s time-poor society, it’s not surprising that people might want to avoid it if they can.
Most of the time, people move out of necessity. Back in 2001-2004, people were moving for other reasons – primarily to make money in a booming property market, and as a result the average hold period of homes dropped across the country. Since then, people have been more inclined to stay put unless they need to upgrade to a larger home, or in the case of empty-nesters and retirees, perhaps downsize to a more low maintenance property.
The high exit costs of moving are a major factor in people’s decision to stay put. In the case of upgraders, some families are so resistant to the idea of moving that they choose instead to extend their current properties to make more room. One of the biggest expenses is the stamp duty on your new home. Some families would rather spend that money on a second storey where they live now. This is a clever way of avoiding moving but with it comes all the inconveniences of renovating – it’s often not an easy option! Plus, if you live on a small block or in an area where council won’t approve a second storey, you might not have the option of extending.
I also think debt aversion might be playing a role in people’s decision-making on moving today. Since the GFC, Australians are far more conservative with their debt. If they don’t really need to move, I think they’re less inclined to go to that expense at the moment.
Some analysts might say rising property prices is a reason for people to avoid moving, but property values haven’t risen much in the past few years so affordability has actually improved, yet many people are still staying put. So, while they might be able to afford an upgrade, people are questioning whether they actually want the additional debt.
Here’s another problem. When fewer people move, fewer homes come onto the market for sale. That means less choice in properties for people who actually need to move. It’s not uncommon to hear buyers say they’ve been looking for months, or even years. In some cases, these buyers are just being picky. But in other cases, there simply isn’t enough stock in their favoured area to allow them to move. So this might also be contributing to a higher average hold period.
If you want to buy a bigger property but you don’t want to increase your debt, one of the solutions is to look in another part of town that is less expensive but offers the same lifestyle. I can’t get you out of moving costs and stamp duty, but if you open your mind to new areas you might find you can afford a larger home for less than you expect.
PS If you’re curious about how RP Data calculates the average hold period, here’s how. They take all the homes sold in a year and average out the difference between the last date of sale and the most recent one for each property. An additional piece of trivia for you - Melbourne has the longest average hold period for both houses and apartments at 10.4 years and 8.3 years respectively. Sydney has the second highest average hold period.
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