Every time someone decides not to sell their home, it is one less conveyancing service that needs to be provided.
In recent times, especially last year, real estate agents were talking a lot about a lack of stock.
A reliable industry source has provided Legal Practice Intelligence with information that across Australia over the past 15 years, the average hold time for houses has moved from 8 years to 11.5 years and apartments have moved from 5 years to 7.8 years.
What do these numbers mean? A hold time of 8 years means that 12.5% of all properties sell each year. When the hold time increases to 11.5 years, 8.7% of all properties sell each year. That is a decline in sale transactions of 30%.
A change in hold time has a magnified effect on property transaction volumes, which affects real estate agents, conveyancers, moving companies and other industry service providers.
It used to be the case that rising property prices was a sure thing for increased sales volumes. A structural change seems to have occurred in some markets, notably Sydney, where prices have risen to such an extent that the hold time factor (i.e. supply) has become the dominant consideration in sales activity.
Our source says that the number of dwellings in Sydney has increased by around 20% to 25% in the past 15 to 20 years but the number of sales has declined in real terms. In Sydney, the hold time for houses has increased from 10 years to 15 years on average and apartments have moved from 7 to 11 years.
Basic economics says that when price goes up, volume goes down. This could be the reason why NSW appears to be a laggard in terms of sales volumes compared to Victoria on a per capita measure.
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