Commissions to shrink as clients buy and hold

by Mackenzie McCarty22 Jun 2012

Broking businesses will come under increasing pressure on commission income as national hold periods for housing stretch out longer in coming years, according to RP Data.

The property research firm released figures yesterday which show that housing hold periods have stretched out to 9 years for a house, and 7.7 years for units.

This is significantly higher than in the years 2000 to 2005, with hold periods having steadily increased from 2006 in a trend that sees them still increasing in 2012.

RP Data said that this inclination from buyers would only increase over time, and this would impact mortgage brokers who relied on transactional commission income to make a living.

"The average hold period is likely to continue to increase over the coming years as private sector demand for credit growth remains below historic levels and sales volumes remain below their peaks," research analyst Cameron Kusher said.

Melbourne brokers are likely to be hardest hit by buy and hold clients, recording the longest average hold period at 10.4 years for houses and 8.3 years for units.

Sydney brokers will come a close second, with a current hold period of 9.8 years for houses and 7.8 years for units.

“Given that Sydney and Melbourne are the most populous capital cities as well as two of the most expensive, it’s no surprise to see that they also have the longest tenure," Kusher said.

"It appears that home owners are increasingly likely to keep their current properties rather than upgrade due to the significant cost," Kusher said.

RP Data suggested that increases in median home values over the period, leading to declines in affordability, were having a marked impact on the period clients held on to their assets.



  • by Ian Jervis -- Paradime Home Finance 22/06/2012 9:34:15 AM

    I see this as good new not bad, the stepped trail system that is offered by some lenders seems to be supported by this news. Put the customers in the best loan available for them at the start and your trail will grow in time. Whats bad about that?

  • by SteveOz 22/06/2012 10:17:04 AM

    so no one refinances?

  • by Ken Crawford 22/06/2012 10:27:11 AM

    So what is the problem - your trail just keeps on growing! this will not mean a reduced focus on your clients. It gives you greater opportunity to build a lasting relationship with them. Thank them for not changing and perhaps forgetting you.