Short-term selling is on the rise, with homeowners trading their properties after owning them less than three years.
CoreLogic has discovered that over the winter months, 16 per cent of properties listed for sale had been owned for fewer than three years – the highest level since 2008 and well above the long-term average of 7.9 per cent.
The underlying number of new listings held for three years or less also reached a new high of 17,828.
CoreLogic Head of Research Australia, Eliza Owen, said short-term resales can occur for many reasons, including people flipping homes, making large capital gains, or moving for work.
She said in an environment where interest rates have risen rapidly and cost of living pressures are high, resales due to mortgage serviceability constraints may also be a contributor.
“The accelerated rise of short-held listings is distinctly noticeable from May 2022, when the underlying cash rate started to move higher from record lows,” Ms Owen said.
“There is also a marked difference between the trend in regional Australia and the capital city markets.
“Proportionately, the uplift in short-held listings is higher in regional Australia, where one-fifth of all new listings added to the market through winter had only been purchased in the past three years.”
Ms Owen said internal migration might be a factor in the regional areas.
She said net movements to regional Australia from capital cities hit almost 12,000 in the March quarter of 2021, up from a previous decade average of 5298.
However, by March 2023, numbers had eased back to 5645 in the quarter.
“It is possible that some of the recent departures from regional Australia are some of those who moved to the regions through Covid, which may be associated with the sale of a property purchased through the pandemic,” she said.
“However, it is worth noting that the rise in short-held new listings was trending higher in regional Australia before the pandemic, from around mid-2019.
“This was in an environment of falling interest rates, and was near the trough of the downturn in regional Australia from 2019.”
Ms Owen said across the capital city markets, the trend in short-held listings had been broad-based.
She said Brisbane had the highest concentration of short-held listings through winter, comprising 19.2 per cent of all listings added to the market.
“Interestingly, the rest of Queensland also had the highest portion of the combined regional markets at 23.8 per cent,” she said.
“Like the broader regional market, South East Queensland was an exceedingly popular internal migration location through the pandemic.
“With the exception of Hobart and Darwin, each of the capital cities is showing near-record high proportions of short-held listings coming to market through winter.”
According to Ms Owen, the highest concentrations of short-held listings were in Wide Bay (29.6 per cent), Cairns (26.2 per cent) and the Gold Coast (25.8 per cent).
“In the case of Cairns and Wide Bay, this is more than triple the historic average concentration of new listings held for less than three years, and was around double the rate for the Gold Coast,” she said.
“The lowest concentrations were across Melbourne, including Melbourne – Inner (7 per cent), Melbourne – Outer East (9.6 per cent) and Melbourne – North East (9.6 per cent).”
Ms Owen said the rise in short-term listings didn’t necessarily mean homeowners lost money on the sale.
“The recent phenomenon of short-term reselling is unlikely to result in a loss of broader financial stability, especially while housing market values are rising,” she said.
“In fact, periods of strong capital gain can be associated with short-term reselling, because the seller can realise a strong profit which can offset high transactional costs or might be put towards buying a higher quality property.”
She said there might be more to recent short-term sell-offs than high interest rates, and the possibility of falling behind on mortgage payments.
“Part of this may be a reversal of Covid-related migration trends to the regions, or even the realisation of recent strong gains, particularly in markets across Queensland, South Australia and Western Australia where capital gains have been especially strong despite recent rate rises,” she said.
“For these states in particular, a rise in short-term resales has done little to drive up total listing volumes, and selling conditions remain strong.
“The more home values rise, as they are expected to in the near term, the more short-term resales are de-risked in terms of servicing outstanding debt.”
