A fall in the number of home movers in the UK is affecting the housing market as there are now fewer homes for first time buyers as mover stay put, according to new research.
Home movers now account for 51% of the residential property market, down from 64% a decade ago and the number of fell by 2% in the first half of 2017 alone compared with the same period in 2016.
The Lloyds Bank home mover review reveals that over the past five years, the average price paid by home movers has grown by 41% or £84,869 and there were 171,300 home movers in the first half of 2017 compared with 174,300 in the same period last year.
The first half of 2016 saw 18,000 more home movers, an increase of 11% compared to the first half of 2015. This increase may have been due to owners making home purchases before the introduction of the new stamp duty charges for second and additional homes, the report says.
Since hitting a market low of 117,900 in the first half of 2009, the number of home movers has grown by 45% or 53,000. However, the current numbers still remain at just under half at 48% of what it was before the financial crash in the first half of 2007 when it was 327,600.
A decade ago, some 64% of all house purchases financed by a mortgage were made by home movers. In 2017, this proportion has dropped to 51%.
‘In the past year, the number of home movers appears to have stabilised despite continuing low interest rates and rising employment,’ said Andrew Mason, Lloyds Bank mortgage products director.
‘There are a number of factors which could be influencing this, more people are paying off their mortgages and not moving, with supply at historic low levels there could be a shortage of suitable homes coming on the market and the cost of moving house could be putting people off,’ he explained.
‘This has meant that home movers now account for just half of today’s housing market compared to a decade ago when it accounted for two-thirds of the market. This has a knock on affect for first time buyers as there will be fewer properties available for them also,’ he added.
In London, the average home mover price has grown by 56% since June 2012 to £561,032, the highest in the UK. The average home mover price in the capital is 41% or £163,579 higher than the South East at £397,452, which is the second most expensive. Northern Ireland has lowest average price of £165,404.
The average deposit put down by a home mover has increased by 40% in the past five years, from £68,663 in 2012 to £96,109 in 2017. Not surprisingly Londoners put down the largest deposit towards the purchase of their next home; £188,916 – four times higher than the average home mover deposit of £48,080 in Northern Ireland, the lowest.
According to Jeremy Duncombe, director of the Legal & General Mortgage Club, the research highlights the bottleneck effect that a lack of suitable and available housing is having on the whole of the housing market.
‘Rather than putting their houses up for sale, growing families are choosing to stay put and extend their homes until they find a property which suits their requirements. However, with thousands of other home owners making the same decision and remaining in or extending their current homes, that ideal property is unlikely to be up for sale anytime soon,’ he pointed out.
‘This scenario is stifling the housing market, leaving first time buyers with little in the way of choice to make their first step. The Government must address this bottleneck by incentivising fluidity in the market. A reduction in stamp duty for first or last time buyers is a good place to start, but we must not also forget the need for a long term solution to boost our housing supply and bridge the gap between supply and demand,’ he added.
The research reveals the ongoing struggles that many are facing, according to Richard Sexton, director of chartered surveyors e.surv. ‘With increasing house prices, living costs and inflation, many homeowners, whether a young family looking for more space or older generations looking to downsize, are deciding to stay put,’ he said.
‘This starts a domino effect. If home buyers feel unable to move up the ladder, this reduces the amount of housing stock available for first time buyers. Put simply, it prevents market growth. Although the market will not grind to a halt, as low interest rates and the willingness of banks to lend keep demand up, these figures should serve as a warning,’ he warned.
‘The Government must address our country’s lack of housing supply sooner rather than later, to allow more first time buyers to step onto the property ladder. This will give a much needed confidence boost to the housing market, give current home owners the assurance they need to move and ultimately, will keep the housing market fluid,’ he concluded.
