Since the middle of the last decade, the average hold period of homes has continually increased as affordability barriers and high exit costs result in owners holding on to their properties rather than buying new ones.
The average hold period is calculated simply as the difference between the most recent date of sale compared to the previous date of sale. When we quote this figure, we determine an average based on all of the homes sold over the past year.
Across Australia, the average hold period for a house is recorded at 9.0 years and at 7.7 years for a unit. The average hold period has continued to increase over the past year. At the same time last year the hold period was recorded at 8.5 years for houses and 7.4 years for units. The average hold period for houses and units was fairly static until late 2005 and actually declined during the 2001-04 property boom, but it has since consistently increased.
At an individual capital city level, Melbourne houses and units have had the longest average hold period over the past year at 10.4 years and 8.3 years respectively. Sydney has the second highest average hold period. Given that Sydney and Melbourne are the most populous capital cities and also two of the most expensive, it is no surprise to see that they also have the longest length of tenure. It appears that home owners are increasingly likely to keep their current properties rather than upgrade due to the significant cost.
The trend towards longer tenure is evident across each capital city market, all of which are showing an increase in the average hold period of both houses and units over the past year. As the table shows, the average hold period across each capital is much higher than it was five years ago and substantially higher than they were in 2000.