An analysis of home sales data shows that the share of homes being quickly resold after purchase has increased over the past 18 months. About 13% of homes sold nationally were bought within the last 3 years, up from just 9% during the pandemic.
This coincides with rising interest rates since May 2022, leading some to conclude this reflects buyers reassessing affordability after purchasing when rates were at record lows. But the full story suggests positive market conditions, rather than financial stress, are the key driver of increased quick resales.
More Homes Bought in 2021 Are Now Being Resold
Part of the increase in quick resales is simply due to more people having bought homes recently. 2021 was a huge year for home purchases, with buyers taking advantage of low interest rates and pandemic-driven relocations.
With more homes bought in 2021, it makes sense that more 2021 buyers would now make up a larger share of current sellers. For some, life circumstances change rapidly, requiring a quick sale and purchase of a new home within just a couple years.
Strong Price Growth Has Enabled Faster Upgrading
Rising interest rates have indeed put financial pressure on some recent buyers. But even more important in explaining quick resales is the rapid home price appreciation seen in the past few years.
Across Australia’s major cities, a clear trend emerges between regions with the highest home price growth since 2019 and those with more quick resales. This suggests strong equity gains are enabling faster upgrading by allowing buyers to jump up the property ladder quicker than expected.
While this is positive for those able to upgrade, it also highlights worsening affordability that prevents more households from entering the market.
Areas With Weaker Job Markets See More Resales
Nonetheless, analysis does find some correlation between unemployment levels and resale rates. This relationship is pronounced in Melbourne, which has lagged other cities in price growth.
This indicates financial stress likely contributes to some resales, especially in weaker economic regions. But the analysis suggests price gains are far more significant in driving increased resales nationally.
Monitoring Financial Challenges Amid Rising Rates
With mortgage rates rising rapidly, financial stress may become a bigger factor in quick home resales going forward. It will be important to monitor how higher repayments could force more households to sell.
But so far, data indicates unexpectedly strong price gains have enabled upgrades for many sellers. For most, positive housing market conditions, not financial distress, appear the primary motivation for reselling so soon after buying.
The housing market remains resilient for now, but risks are emerging. Stay tuned for ongoing coverage of how rising rates could impact real estate trends.