Melbourne’s property market enjoyed a boom in buyer activity during the past two pandemic years as cheaper borrowing caused a boom in demand at a time when supply was already thin on the ground.
And data shows that it was the cities with a clear lack of available properties to purchase where prices rose the most rapidly – one of which was Melbourne.
Melbourne’s median holding period for property buyers in Melbourne is 9.1 years for a house and 8.1 years for a unit.
So with many properties only coming on the market once every 8 or 9 years (at most), it’s easy to see why supply is so tight.
And there are some Melbourne suburbs where those hold times are significantly longer.
Corelogic’s recent Pain and Gain report also shows that higher hold periods have typically resulted in higher nominal capital gains with properties held for a period of 30 years or more achieving median gains of $781,750.
Outside of this, properties held between 24 and 26 years or purchased between 1996 and 1998 also achieved extremely high gains.
“Properties were acquired relatively cheaply at this time because of a significant housing market downswing through the mid-90s,” report author and Corelogic head of research, Eliza Owen, said.
Here are the top 10 Melbourne suburbs where homeowners hold onto their properties the longest, according to Corelogic.
10 most tightly-held Melbourne suburbs for houses
Watsonia North made the top spot on the list of Australia’s most tightly held suburbs in Melbourne, with homeowners hanging onto their houses for 23 years on average before selling.
Vermont South and Eaglemont came in a close second and third on the list, with homeowners holding onto their properties for 21 years apiece.
Coldstream, Taylors Lakes, Clarinda, Park Orchards, Caufield, Tecoma, and Wantirna all also made the top 10 list, with the suburbs’ homeowners staying put for more than 20 years, or 19 years for Wantirna.
CoreLogic head of research Tim Lawless said these suburbs were now seeing generational ownership and had hold times well above Melbourne’s averages of 9.1 years for a house and 8.1 years for a unit.
“The longest-held houses are all part of people going through a gradual upgrading process – people are buying in a suburb and then going through a cycle of … finding their forever home, so to speak,” he said.
“It’s interesting that we don’t see the blue-chip suburbs like Toorak in the tightest held, which is kind of interesting because they’ve generally reached the pinnacle of their upgrade cycles.”
Houses, he said, would always have a longer hold time as more investors bought units, selling up sooner than owner-occupiers.
10 most tightly-held Melbourne suburbs for units
Melbourne’s south-eastern suburb of Black Rock takes the number one spot as the suburb with the longest hold period for units across the city.
Property owners hold their homes – valued at around $1.13 million – for 16 years.
Close behind is Mont Albert North where unit owners hold for a median of 15 years, and Vermont and Meadow Heights (both of which have lower $846,724 and $440,712 medians respectively) and median hold periods of 14 years each.
East Melbourne, Canterbury, Carlton North, St Kilda West, Albert Park, and Middle Park make up the remainder of the top 10 list, with median hold periods of 11-13 years.
Suburbs with more home buyers and fewer investors typically had longer median hold periods, said Eliza Owen, CoreLogic’s head of research for Australia, particularly areas that were popular with families or an older demographic.
A key takeaway
As always, these tightly-held suburbs aren’t necessarily the suburbs I would recommend investing in.
In fact, most are not!
That’s because when it comes to property investment, it’s most important to look for an investment grade property in the ‘right area’ rather than chasing ‘top hotspot’ or growth areas.
But even before looking for the right location, make sure you have a Strategic Property Plan to steer you through the upcoming challenging times our property markets will encounter.
You see…property investing is a process, not an event.
Things have to be done in the right order – and selecting the location and the right property in that location comes right at the end of the process.
Fact is, the property you will eventually buy will be the result of a sequence of questions you will need to ask and answer and a series of decisions you’ll need to make before you even start looking at locations.
Long before we talk about a property or the right location with our clients at Metropole, we look at factors including their age, their timeframes, and the desired end results in other words, what do they really want the properties to do – are they looking for cash flow, capital growth, or a combination of both.
And that’s because what makes a great investment property for me, is not likely to be the same as what would suit your investment needs.
So at Metropole, it all starts with helping our clients formulate a Strategic Property Plan which takes into account their surplus cash flow position, their risk profile (for example would they consider undertaking renovations or small development), and whether they currently own a home or are wanting to buy a new home or upgrade their existing home in the future, if they are going to earn more income in the future, or if they’re going to decrease their family income because they’re having a baby, how many other investment properties they own, where they are located and how they are performing plus 35 other considerations.
So whether you’re looking to buy a new home or an investment property and you want more certainty and direction in these interesting times, my recommendation is to sit with an independent property strategist to formulate a plan.
It’s just too difficult to do on your own and I’ve found most investors tend to be too emotionally involved to see their situation objectively.
If you’re a beginner looking for a time-tested property investment strategy or an established investor who’s stuck or maybe you just want an objective second opinion about your situation, please leave us your details here and we’ll be in contact and give you more details about how to book a Strategic Property Plan Consultation.
