Is Resales Set To Rise Even Further?

In last week's report, we discussed how in 2023, homeowners were choosing to hold on to a property for longer.

In 2013, the average length of homeownership for a House was seven years and for a Unit it was six years.

Just ten years later, home tenure has now increased to nine years for houses and eight years for units.

Further to these numbers, an article released yesterday by NewsCorp highlighted the fact that on the Gold Coast, 20% of all current sales had purchased the property in the past three years.

This is an incredible statistic and when analysing why, the reasons may be varied but the most obvious reason is affordability.

Whilst there will undoubtedly be purchasers who has chosen to sell lock in the capital gains seen over the past few years, affordability issues are likely to be the number one reason.

It's ironic to think that early last year, the RBA was advising homeowners and potential buyers that interest rates would not rise until 2024 at the earliest. 

With the cash rate at the time sitting at just 0.1%, many buyers purchased on the RBA's advice and made their calculations based on the RBA's statements.

If we fast forward to today, we now see many of these buyers looking at yet another interest rate rise on Melbourne Cup day.

If interest rates rise as many expect on Melbourne Cup day, the interest component of a $600,000 loan would have risen by almost $500 per week over this time.

One has to wonder if this incredibly high percent of resales is set to rise even further over the coming months as homeowners battle rising repayments.

The article with the headline "Selling fast: Post-Covid regret behind rise in quick resales"  was published yesterday and is our feature piece this week. 

We have also added the latest HTW valuers report for October that includes their property clock for both Houses and Units.

Please see below. 

Selling fast: Post-Covid regret behind rise in quick resales

Queensland’s property market is unlike any other in Australia as the state grapples with a post-Covid hangover. SEE WHERE IT’S HAPPENING.

Buyer’s remorse is partly to blame for a surge in quick resales, with 17 percent of listings in Queensland having been owned for less than three years — more than in any other state.

New PropTrack data provided exclusively for News Corp shows the boomtime property trend is back, with experts saying it is being driven by a combination of homeowners using their equity to upgrade, mortgage stress, and post-Covid regret.

Breaking down the data by region, the Gold Coast has the highest volume of resales, with a fifth of all home listings in the past six months also having been for sale less than three years prior.

Wide Bay has the next highest concentration of short-held listings, comprising 19.7 per cent of all listings added to the market, followed by Cairns (19.6 per cent) and Sunshine Coast (19.2 per cent).

PropTrack senior economist Paul Ryan said parts of Queensland had experienced significant price growth in the past three years — particularly in some of the regions, which could explain why homeowners were cashing in on their capital gains sooner than normal.

“The price growth we’ve seen across some of Queensland’s regions has been enormously strong,” Mr Ryan said.

“We’re seeing the rate of short-held listings increasing and the last time we saw this was early in the pandemic, so the commonality is that we see this when prices increase, which suggests that increase in equity is giving people the capacity to upgrade to a bigger home.

“In the lending data, we’re seeing a big jump in the proportion of people with a 40 per cent deposit, and that points to a lot more upgrader activity this year.”

Another explanation for the trend could be buyers choosing to return to the city after moving to the regions during the pandemic.

He said it was possible mortgage serviceability was another factor for the reselling trend.

“Maybe there was a frothy bidding up of some home prices in 2021 and now those households are uncomfortable with the size of their loan and are selling,” Mr Ryan said. “We’ve heard lots of anecdotes, but official data suggests there’s still a low number of people in mortgage stress.”

Property investment expert James Fitzgerald of Custodian said some property owners could possibly justify reselling now given the “enormous” capital gains in Brisbane and parts of Queensland since the pandemic.

But Mr Fitzgerald said the more successful route was holding onto a property and using the equity to eventually invest in another one, rather than buying and selling.

“The property market’s a cycle,” Mr Fitzgerald said. “Lets say the median house price doubles every 10 years. It bubbles along and for a two to three year period you see growth.

“So, I’d say somewhere between 10 and 20 years is the blueprint.”

He also pointed out the costs associated with buying and selling.

“The rule of thumb is you’re up for three to five per cent on the way in and out — and that’s before you’ve paid tax,” he said. “Then, you’ve got to get back in to the market

Please click here to see the HTW Valuers Month in Review for October 2023

Please see below HTW Valuers Property Clock For October 2023 - Houses

Please see below HTW Valuers Property Clock for October 2023 - Units