This week’s Property Pulse looks at the average time it takes to sell properties in Australian capital cities and examines what factors impact the average time on the market.

The measurement of average time on the market is extremely important and is used to understand how the overall market is performing and how long it will take to sell a property. The time on the market statistic can be useful for many segments of the market. For agents, it is a good benchmark: are you taking a longer or shorter time to sell properties. For sellers it is important to understand why it takes longer to sell in the current market conditions. For buyers it is often the case that suburbs with a longer average selling time will, in most cases, be more negotiable.

On a city by city basis, houses currently sell the fastest in Melbourne, within 31 days, closely followed by Sydney where houses sell after an average of 34 days. Houses currently take the longest time to sell in Darwin (78 days) and Adelaide (69 days). The results over the last four years reflect the overall market trends during that time. For example, average time on the market within Sydney has shown little movement due to a fairly flat property market. Perth on the other hand, was experiencing a boom during 2005 and houses were taking just 25 days to sell, since that time buyers have become less active and value growth has transformed into value falls, resulting in houses taking longer to sell. The average Perth house currently takes 62 days to sell.

Perth is again a very good example of what can occur over time. As the market was booming during 2005, the average Perth unit took just 16 days to sell. During the following years value growth slowed and actually resulted in value falls and as such, time on the market has also increased substantially. Units currently take an average of 54 days to sell.

The two tables below detail quarterly value growth by mainland capital city and the average time on the market for house and unit sales. As the tables show, in almost all circumstances there is a direct relationship between value growth and time on the market. As quarterly value growth improves, the time on the market declines however, as quarterly value growth declines or falls in to negative, the average time on the market for properties increases dramatically.

Another important relationship to understand is the link between time on the market and the average vendor expectation error or level of discounting. As the time on the market increases, it generally results in a greater level of vendor discounting in order to achieve the property sale. Again this is a clear link and as properties sit on the market for a longer period prospective buyers become aware that they have been available for sale for a long time potential buyers become less negotiable on their price, resulting in vendors generally needing to drop their asking price in order to achieve a sale.

The relationships between value growth, the average time on the market and average discount is understood by most property professionals. However, vendors need to understand that when there are fewer buyers, properties take longer to sell and a realistic price expectation becomes paramount. Essentially, the equation comes down to the time value of money, is it better to sell at a slightly lower price and save on holding costs, or is it better to hold out for the desired price? This is the question that only the vendor can answer but one which in the current market agents certainly need to ask their vendors when properties aren’t selling.

The average time on the market for units has mirrored houses fairly closely over the last four years however, units generally sell quicker than houses. Currently, units sell the quickest in Melbourne (27 days), closely followed by Sydney (31 days). Units take the longest time to sell within Darwin (69 days) and Adelaide (62 days).