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Myth buster: Is 7 years the true hold period of a suburb?

By Greg Dickason
12 September 2014 | 1 minute read

If I had a dollar for every time I heard “houses turn over every seven years” I would be quite a rich man. It implies a lot of people will sell their house after seven years of occupancy, and that this is therefore the ideal time to market to prospective vendors.

Do they? Or is this a real estate myth waiting to be busted?

I took a look at Paddington, NSW and Paddington QLD as a quick check.  The trend in ‘hold period’ is quite instructive (see end of article).

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Since 2004, in both Paddingtons the hold period for houses has gone from less than seven years in 2004, to over nine years for Paddington NSW, and over 11 years for Paddington QLD. Units are almost the same: from less than six years in 2004 to nine years (NSW) and 10 years (QLD) now.

I was interested to see if this was a trend across other suburbs, or was specific to inner-city affluent suburbs like these. So I checked average hold period for houses for a few more suburbs with different median prices:

Suburb

Median Price (May 2014)

Average Hold Period (2004)

Average Hold Period (2014)

Paddington QLD

$898,500

6.6 years

10.9 years

Paddington NSW

$1.54 million

6.3 years

9.4 years

Toorak VIC

$2.72 million

9.3 years

12 years

Darra QLD

$330,000

6.9 years

11.6 years

Cronulla NSW

$480,500

7 years

11 years

Geelong VIC

$487,450

8.9 years

10.7 years

 Source: RP Data

The results were very similar – all suburbs I checked had average hold periods that were increasing and were above seven years. It was also apparent that the ‘seven year rule’ was a good rule of thumb in 2004, where many suburbs had close to seven-year hold periods. Not only have hold periods increased since then, they have become more divergent, with the range of values widening between suburbs.

If you are a real estate agent looking to prospect more intelligently, often you will be told to do a ‘spike analysis’ or ‘spike report’.  This uses the ‘seven year rule’ to target properties held for – you guessed it – seven years!

I suggest that instead you use a tool such as the RP Data ‘find your next listing’ in RP Professional, which actually looks at the suburb you are prospecting and uses the hold period for that suburb.

In conclusion, the myth is BUSTED!

If you have suggestions for other myths for me to check for next month, send them in and I will do some research for you.  

Myth buster: Is 7 years the true hold period of a suburb?
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