When Not To Sell Your Property
Written By: Hamish Ferguson
Property Advocates have often advised that once you purchase a property, you should never sell your property. This does not sound like good news if you are and investor and want to sell the property along the way to fund your retirement. So how long should you hold onto your property?
Recently RP Data who amongst other things are a major supplier of valuation information to the banks released some interesting data comparing properties that were sold for higher than purchase price vs lower than purchase price.
Capital City vs Regional area gains
In capital cities, properties that were sold for a loss were held for an average 5.3 years where as properties that had had 100% growth were held for an average 16.4 years and the average time held for properties that had been sold for a higher price was 9.9 Years
In regional areas properties that were sold for a loss were held for an average of 6.4 years, 100% growth occurred where the average was 17.6 years and for properties that were sold for a higher price than purchased had been owned for 10.2 years on average.
What is also interesting is that in capital cities, the average gain was between $259K – $314K, in regional areas the average was $139K. Obviously regional areas will include cities such as large as Newcastle (with a population of approx. 750K) and some as small as Dunedoo (population around the 800 mark)
Now whilst this may seem to be favouring the cities, please do not think that it is our aim to make this assumption. Rental yields can often affect the owner’s ability to hold onto the property for this length of time and a rough rule of thumb is that over the long term, the rental yields in regional areas can be slightly higher than the cities. The Brisbane area is currently challenging this rule however it is not always the case
Now, in any given area, there are good areas to purchase and there are areas that will grow at a slower pace. For example, in Sydney which is our largest capital city, Bondi Junction is going to behave very differently to Blacktown. In Newcastle, Cooks Hill is a very different area to Swansea.
What is important to take from this information is confirmation that Property is a long term strategy and that your expectations need to be realistic. Also this will apply, whether you are a home owner or property investor. Lastly get good advice as this can make a huge difference to your ability to hold the property for the right length of time. If you need a good property adviser contact us for further information.
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