The average hold period of a property is an important indicator as it can guide agents as to where potential vendors are and it can also help to determine likely equity in a property.
The hold period, or the average length of time a property is held before selling, is an important indicator and can be used to develop greater insight into a particular property market. The hold period is simply determined by the difference in time between when a property is purchased and consequently sold.
On a national basis over the 12 months to May 2009 the average hold period for houses was 7.5 years and the average hold period for units was 6.6 years.
What this essentially means for houses is that 7.5 years ago the median value was recorded at $265,557 and in May this year the median house value was $495,700. Based on this, the average value of those houses sold last year has increased by $230,143 since purchased, at a rate of 8.7% annually.
For units the national hold period is 6.6 years and based on a median value 6.6 years ago of $279,785 and a current median of $406,587, the average unit vendor during the last year has seen the value of their property increase by a total of $126,802 since they first purchased or by 5.8% annually.
Across the housing market and on a state-by-state basis Victoria (8.7 years) had the longest average hold period across sales during the last year. Victoria was followed by: New South Wales (8.3 years), ACT (7.5 years), Queensland (6.8 years), Tasmania and Western Australia (both 6.5 years), South Australia (6.2 years) and Northern Territory (4.5 years).
Caulfield in the inner north region of Melbourne had the nation’s longest average hold period during the last 12 months. Across the 23 house transactions last year, vendors had owned their Caulfield house for an average of 15.8 years which was more than double the national average and more than 7 years longer than the Victorian average.
Throughout each state and territory the suburbs which recorded the longest average hold period for houses were dominated by areas of the capital city. In New South Wales and Queensland it tended to be suburbs with more affordable median house prices which tended to have the longer average hold periods, whilst in the remaining states it was generally more expensive suburbs which recorded the longest average hold periods. In the main, those suburbs detailed recorded an average age which was greater than the local average and these suburbs also tended to have a greater than average income level. The suburbs detailed also tended to be longer established residential areas rather than newer areas of the relevant cities.
For units, it was also Victoria which had the longest average hold period recorded at 7.8 years. Following on from Victoria was; New South Wales (7.1 years), ACT (6.6 years), Tasmania and Western Australia (both 6.4 years), South Australia (5.9 years), Queensland (5.7 years) and Northern Territory (4.0 years).
It was another Melbourne suburb which had the longest average hold period across sales during the last year. Strathmore located in the Moonee Valley LGA recorded an average hold period of 15.4 years across the 26 unit sales during the last year. This result was much more than double the national level and more than 7 years greater than the Victorian average.
Just like the housing market, the suburbs which have the longest average hold period for units tended to be those which are located in the capital city areas. In all states except New South Wales and Victoria it tended to be more affordable units which appear on the list of suburbs with the longest average hold period. The suburbs detailed showed a prevalence of older than average residents within. Meanwhile, the markets highlighted tended not to be the better established inner city unit markets, rather they were defined as being more suburban locations.
These results highlight those suburbs with the longest average hold period but this calculation has many uses and is simple to calculate. From this simple calculation, real estate agents can target those people most likely to be looking to sell their property. Vendors can use this measurement along with a valuation to determine the likely level of equity available in their home.
For those who have owned their home for quite a while and never looked into the statistics you may be quite surprised to see just how much equity has built up in your property and how quickly it has grown in recent years.
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Properties in Victoria have the longest average hold period
Friday, August 14, 2009
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