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The old saying “if it ain’t broke, don’t fix it” applies to some property owners, with a local researcher highlighting 10 suburbs that has houses with holding periods well over 20 years.
According to RiskWide Property Research CEO Doron Peleg, recent property downturn saw “a significant material reduction in the number of transactions and, consequently, on average, holding periods went up”.
Mr Peleg noted that there are many reasons people in these suburbs may choose to hang onto their property even longer.
“It is well demonstrated that the long-term approach is very effective, and with transaction costs being extremely high, this provides negative incentive for home owners,” he said.
“A couple of other reasons not to sell are that the primary place of residence is not subject to land tax and, in most cases, is also below the means testing threshold for retirees.”
With huge population growth in both Sydney and Melbourne, and systematic undersupply of family-suitable properties, Mr Peleg added it was “very likely” holding periods would only increase as long-term price growth was evident.
“Obviously, the greater the holding period in strong markets, the greater the equity people have,” Mr Peleg said.
“So, with property prices making a strong comeback, ultra-low interest rates, a more relaxed lending environment and auction clearance rates sitting above 70 per cent, it pays owners to sit back and see what happens.
“Victoria, which has the highest population growth across Australia, and NSW, which also has good population growth, are displaying strong economic fundamentals, solid economies and healthy job markets.
“Their economies have delivered and are projected to deliver solid economic growth. Government spending is high, and these states also attracted a consistent level of private capital expenditure, which has contributed to their stability,” he said.
Property refers to either a tangible or intangible item that an individual or business has legal rights or ownership of, such as houses, cars, stocks or bond certificates.