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Almost 40 per cent of Australian home owners are reportedly planning to sell a property within the next five years, with nearly one in five citing financial pressures as the reason.
According to research from Compare the Market, physical property requirements such as location and size are the motivating factors behind many of the owner-occupiers who have decided to sell.
Close to one-third said they intend to upsize, while a similar proportion said they will downsize. Respondents (who were able to choose more than one reason for selling) also cited location as a motivating factor, with over one-quarter stating they are moving to a different suburb or community.
Finances are the next prevailing reason for selling, with 19.5 per cent stating that they are parting with a property to alleviate cost-of-living pressures.
According to the data, 6.2 per cent will sell within the next 12 months, 12.4 per cent will sell within the next two years, and a further 20.7 per cent said they will sell within the next five years.
On the investor front, financial pressures are also a motivating factor for putting a property on the market.
“Unfortunately, a number of landlords are exiting the property market because of an increase in property taxes, fees and stricter tenancy legislation. They simply can’t afford to pay for a second mortgage,” said Andrew Winter, property expert at Compare the Market.
“You also generally pay a higher interest rate on investment loans than you do owner-occupied – so when push comes to shove, people are obviously going to choose to keep the property they live in, which is costing them less,” he noted.
Just under 9 per cent of survey respondents said they are selling their investment property to cash in on the money, 3.8 per cent can no longer afford to pay a second mortgage on the investment, and 1 per cent said there’s too much red tape for investors.
“The data is really quite concerning because investors are a big part of building homes and the long-term solution to the rental crisis,” Mr Winter opined.
“We need investors in the Australian housing market to help facilitate new supply to come in.
“There needs to be rental reform that benefits the tenants without punishing the landlords.”
With CoreLogic recently reporting that roughly 10 per cent of properties that were sold in the June 2023 quarter that were held for less than two years were sold for less than the purchase price, Mr Winter cautioned that property owners feeling the pinch should be strategic in selling due to stretched finances.
“If you can hold onto your property for at least five years, you should be able to see some capital growth – depending on the dwelling type and area.
“Before you decide to sell, it’s important to consider the purchase cost, selling costs, capital gains tax, personal time, and holding costs of the asset,” Mr Winter noted.
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