Tenure Of A Property
Property is considered a stable vehicle to build wealth and has long been viewed as a milestone of financial success. Tenure can be linked closely to profitability, as holding property for longer periods of time means you generally avoid the risks of market volatility over shorter time frames.
Tenure measures the number of years that a property is owned before being resold. In Melbourne, the current average house tenure is nine years, eight years for apartment owners. If we localise that figure further into individual suburbs, the average can be as short as 7 years and as high as 13 years in some areas.
On average that’s up approx 2 years across the board in Melbourne from 10 years ago (according to Domain data).
There are many factors driving tenure and the slight fluctuations in length of ownership we see in certain areas. Property price cycles for example can be a lever in driving tenure higher or lower as homeowners will often delay or speed up selling decisions based on whether they think they can earn more or less if they sell or hold.
A longer tenure may also speak to the behavioural economics involved in property; for example the fact that a homeowner will very rarely sell for less than they purchased, unless financial circumstances force their hand to do so.
Housing affordability, increases in rates & mortgage repayments, and costs associated with transacting property including stamp duty are all big financial factors for holding property.
As well as ongoing low stock levels, for example downsizers may hold off on selling for an
extra couple of years due to lack of suitable housing in the location they are familiar with. Similarly, families needing to upsize but stay within a particular school zone or within close proximity to current schooling may also choose to stay in the too small property longer than intended or is ideal. This could be due to a combination of factors, the lack of upsizing stock available as well as the affordability of a move.
It's natural for home owners to aim to buy at a low point and sell at a high point, however the complexities of various submarkets around Melbourne and the unique characteristics of individual properties make it challenging to predict.
As always, our advice is to buy and sell when the time is right for you. And always buy property with a view to hold for at least 7 -10 years!
Prop Culture