TRENDS
Average Bond
Tenure and Trends
Lightstone investigates first time and repeat buyer trends in the
property market
R
esidential property is a worthwhile investment
vehicle for many individuals, providing many young
professionals and recently wedded couples a solid asset
to start building their wealth at a relatively early age. One
of the major differences between property and other non-
physical investments is that property requires continuous
maintenance to preserve and increase the value over time.
A trend that has emerged since the housing market crash
and subsequent subdued economic growth is the tendency
of property owners to retain properties for longer periods
compared to before 2008. Data analysed by Lightstone
reveals that first-time buyers hold on to properties for up to
twelve years as opposed to repeat owners who keep properties
between seven and nine years.
The average bond holding period split by prop-
erty number
Although twelve years may seem like a long period to retain a
property; during the so-called property boom between 2003
and 2005, first time property owners held on to properties
for roughly seven years and repeat owners for up three years.
A closer look at the data showed that this was due primarily
to buyers modernising properties through renovations and
then ‘flipping’ it for a profit. This is a trend that has since died
down, increasing the average bond tenure of properties.
Average bond tenure was not the only change in buyer
behaviour after the property crash, with the proportion of
bond cancellations by first time owners dropping from 77%
in 2003 to 67% in 2007. In 2010 the market showed stability
remaining at 63%. Lightstone attributes this fluctuation to
the change in property market, prompting new entrants to
avoid selling their property during a time of subdued property
growth. As a result, first time property owners are trying
to retain properties until the market starts showing more
positive growth again.
The bond activity of buyers over time
A big implication as a result of increased buyer tenure is
that most of the properties entering the market would have
been held for a relatively longer period when compared to a
few years ago. The longer a property is held the greater the
variability in the long-term maintenance of the property
and the bigger a buyer’s chances of buying a ‘lemon’. This
requires the buyers (especially those who are buying their first
homes) to examine any potential properties for maintenance
related problems such as damp, irrigation systems and leaking
roofs, with particular attention to illuminate forthcoming
frustration and unnecessary expenditure.
THE ULTIMATE PROPERTY INVESTMENT RESIDENTIAL GUIDEBOOK
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