Fees hit sales, economy
RECENT research has revealed we are not selling up as often as we did.
This data does not illustrate slight increases, but a dramatic turnaround. In the past 10 years, hold periods for homes have increased 38 per cent in Melbourne, and up to 110 per cent in Darwin.
Travelling around Australia in more recent years I have become aware that we just seem to be staying put longer. Has moving house become less fashionable or are there other forces at play here?
For many, the lack of moves was likely not through choice.
Weak sales markets in many parts of Australia over the past decade have meant many homeowners have not been able to sell and move on. That may be due to a reduction in buyer demand in that area, or an inability to achieve a sale value in line with vendor expectations; or in many cases not even being able to achieve a figure that equates to what was paid at the time of purchase.
For others, I believe the sharp increase in related buying and selling costs have played a part in the trend.
First, the increase in house prices, although good for homeowners, has meant percentage-based real estate agent fees have increased disproportionately to other household and lifestyle costs, even for the most modest home.
Second – and this is the real sting in the tail – stamp duty, that sneaky tax that was introduced many years ago and was once a fairly insignificant figure, is now equal to a decent family car and, in many cases, a whole fleet of them.
Moving house is great for our overall economy, from removal and storage costs, to professional services and not forgetting retail – we move house, we hit the shops, we buy an extra coffee during all this shopping and have a meal out to celebrate our move.
It’s a real win-win, so perhaps if any of our inspired political leaders are reading this, may I suggest a stamp duty review to keep us moving?
I don’t think our passion for moving has waned, but the above factors have led to quite a substantial change to our residential housing market.
In our three largest cities, this isn’t a slight change, but a dramatic shift.
Sydney has changed from typical home ownership of just over seven years to well over 11; the same in Melbourne. Ten years ago in Darwin it was only three years before the sale board went up outside the typical home, but now it’s more than double that time.
Percentage-wise they are astonishing statistics and perhaps a polite nod to real estate agents and the government that charges may need to be given a little review?
It can be reasonably argued that if the property ownership terms continued to grow at the rate seen over the past decade, in just 10 years the average home across Australia’s will have a hold period of about 20 years. That’s not great for our economy.
Naturally, perhaps charges will be adjusted to fairer levels at some point due to market forces.
As markets improve, selling becomes easier and low interest rates are making the trade-up seem more viable.
These elements may help restrain the dramatic swing of the past decade, but the limited established home stock will also make buying an established home even harder if nothing changes.