Thursday, 23 September 2021

Home movers are now only half the market

Home movers are now only half the market

THE number of people moving home has dipped in the first half of the year and now accounts for only around half of the housing market — the first-time home mover numbers have fallen behind first-time buyers since 1995.

The findings, which are set out in the latest Lloyds Bank Homemover Review, have sparked claims in some quarters that the government’s stamp duty regime is clogging up the property ladder.

There were 170,000 home movers in the first half of 2018, down 1,700 (one per cent) compared with the same period last year and down 33,000 (16 per cent) on the second half of 2017.

This inactivity may be being fuelled by a shortage of suitable properties for sale but reflects the broader housing market, which is showing little sign of movement.

The fall in home mover numbers follows a rise in 2017, which reported the highest level of movers in 10 years. This also coincides with a three per cent rise in first-time buyers to 175,500, so that for the first time since 1995 just under a half (49 per cent) of all house purchases financed by a mortgage were made by home movers — down from 62 per cent in the first half of 2011.

Andrew Mason, Lloyds Bank mortgage products director, said: “Despite continuing low mortgage rates, the home mover market has stabilised with little movement in the first half of this year to leave first-time buyers now driving housing activity.

“This may be in part due to the Help to Buy scheme enabling first-time buyers to purchase a new property, combined with the low availability of the ‘right type’ of homes for those looking to move up the housing ladder.

“The costs of moving house and potential further interest rate rises may also be weighing on potential homebuyers’ minds.

“However, it is good to see the number of first-time buyers increasing, helping to keep some movement along the property ladder.”

Over the past five years, the average price paid by homemovers has grown by 35 per cent (£77,457) from £219,479 in 2013, to £296,936 in 2018 — a record high. In East Anglia, the average price a home mover pays has grown by 46 per cent since 2013 to £305,612 — the highest rate of growth in the UK.

Greater London and the South East follow with 45 per cent growth in average property prices since 2013 — Greater London has the most expensive home mover homes with an average price of £566,200, followed by the South East on £412,759.

The least expensive home mover homes can be found in Northern Ireland, with an average price of £170,031.

The average deposit put down by a home mover has also increased by 31 per cent in the past five years, from £76,303 in 2013 to £99,592 in 2018. Not surprisingly Londoners put down the largest deposit of £189,167 towards the purchase of their next home, which is nearly four times the average home mover deposit of £48,003 in Northern Ireland.

However, while Londoners put down the highest deposit in monetary terms, home movers in the South West and East Anglia contribute the largest deposit as a proportion of average house price — 38 per cent or £117,892 and £116,278 respectively in cash — followed by the South East (35 per cent).

Of the estimated 23.1 million households in England, 14.4 million (63 per cent) were owner-occupiers. This remained unchanged in 2016-17. However, the composition of owner-occupation rates has moved towards an increased proportion of outright owners (34 per cent) versus mortgagors (28 per cent), partly explained by large numbers of baby boomers reaching early retirement age.

So while the number of home movers with mortgages is stabilising, the bigger picture may be that this is in part because home movers who don’t need a mortgage are on the increase.

In 2006-07, about three quarters (72 per cent) of those aged 35 to 44 were owner-occupiers. But by 2016-17, this had fallen to half (52 per cent).

While owner-occupation remains the most prevalent tenure for this age group, there has been a considerable increase in the proportion of 35- to
44-year-olds in the private rented sector (11 per cent to 29 per cent).

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