Want to know how the market is?

The question I am most often asked is “How is the market?”.

No matter who you ask on any given day, they will surely have an answer for you. But it’s the numbers that count.

So, how is the market?

One reality is that the rate of sellers making a profit is the highest since July 2010 despite the counter-effect of rising interest rates and economic pressures. In turn, the increase in equity is providing a bit more financial stability for those facing affordability challenges.

Short-term resales can be an indicator of how households respond to rising interest rates. The latest figures suggest the short-term selling for properties owned for two years or less has passed a peak, as the value of housing lending on fixed terms had also passed a peak by March 2022. Interestingly, properties held for two-to-four years have made up a relatively high portion of resales in the March quarter at 15.3%, which may be influenced in part by the expiry of three-year fixed terms.

When it comes to houses vs units as investments, houses win hands down. The gap between house and unit profits had roughly tripled in the past four years with nominal gains from houses sitting 85.5% higher than units in the March quarter of 2024. We know there is a housing shortage where demand is outstripping supply but demand for more space and a detached house far exceeds that for high density dwellings, which was exacerbated during the COVID years. This has led to individual houses being more desirable, lucrative and valuable than units.

Hold periods for property generally move lower as home values go up. This is due to property owners taking advantage of potentially making a profit over a shorter period of time. The latest data shows that the median hold period for resales is 9 years, during which time national home values increased by approximately 58.2% through the end of March 2024.

As they say, time in the market rather than timing the market is critical to maximising returns for most resales. Generally, the longer a vendor holds a property the higher the returns, but we all know there are variations to the rule and most people don’t transact property for purely financial reasons.