Source: RP Data research
Quite often, myths or commonly accepted facts about the property market can turn out to be incorrect when a review of the actual numbers is conducted.
Do people really buy and sell every 7 years?
It’s often said that most home owners buy and sell every seven years, however, research shows that in Melbourne the average hold period for houses is 11.4 years and for units 9.5 years.
While the hold period differs from suburb to suburb, there are a number that match the commonly accepted seven years. In Melbourne these include Pakenham, Narre Warren South, Burnley and St Kilda West. Some of the shortest hold periods for property ownership are in the city’s newest suburbs such as Lyndhurst, Dorren and Truganina where the average hold period for a house is around 4 years. At the other end of the spectrum is Vermont South with a hold period of 18.2 years.
Is it true that houses double in value every decade?
The answer to this question highlights that sometimes timing is everything in real estate. The RP Data Home Value index for houses in Melbourne shows values doubled in just over 7 years between February 2003 and October 2010 however, the same scenario occurred over 11 years between February 2003 and May this year.
Do rents always rise?
It seems that rents are often always rising when in fact they may not be. The reality is that it all depends on balance of demand and supply in the relevant suburb. For instance, over the past five years advertised rents for houses in Toorak, Dorren and Mernda have decreased. While in Clayton, Oakleigh and Eltham they have risen by no more than 1 per cent per annum. There are many more that have risen over this time including the popular suburb of Northcote where rents have risen by 28 per cent over 5 years.
Houses sell for more than the advertised cost – but do they?
A popular topic over dinner tables and in the press is the relationship between advertised prices for houses at auction and the sale price. The main view is that the sale price always exceeds the advertised price. Less often discussed is the fact that most homes sell for less than their advertised price. Around 70 per cent of homes sell by private sale and are usually sold for around 6 per cent below the initial advertised price. However, this does vary across the city with the discount being 8 per cent in Springvale, and 4 per cent in Yarraville.
RP Data Victoria Housing Market Specialist