The changing face of the UK's housing market means the average turnover of a property has almost trebled since the 1980s from eight to 23 years, according to the Intermediary Mortgage Lenders Association.
Its report, called The New Normal: One year On, shows that annual turnover of the private housing stock has fallen from above 12 per cent to only 4.5 per cent over the last three decades. As a result, IMLA's analysis indicates the average' home currently changes hands once every 23 years compared with every eight years during the 1980s.
The IMLA report argues that low housing turnover is driven by a combination of people buying their first homes later; by a larger private rented sector where turnover is lower; and by the baby boomer hoarding effect' where middle-aged homeowners are staying put, tying up a large part of the housing stock.
These factors are likely to keep turnover down for the foreseeable future, potentially limiting mortgage lending and restricting access to existing properties.
IMLA's analysis also shows the estimated contribution of mortgage finance to the total value of UK housing transactions hit a new all-time low of 41.7 per cent last year. It means just £4.17 of every £10 spent on house purchases in 2014 was funded by mortgages while cash or equity made up £5.83.
IMLA expects the estimated contribution of cash (including deposits and cash purchases) to housing transactions will exceed 60% for the first time on record by 2016.
In the absence of a sustained rise in housebuilding and improved affordability and turnover, the fact that properties are coming onto the market less frequently severely limits the scope for would-be first time buyers to graduate to owning their own homes warns Peter Williams, executive director for IMLA.
Inertia in the property market spells danger for future owner-occupation levels, and the growing influence of cash and equity is sowing the seeds of a permanent social divide he claims.
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Comments
Housing supply.
1. Continuous mantra about needing more houses.
or
2. Too many people on the island.
Problem. Do we increase supply or decrease the people or both
As a first-time buyer, the sense of relief at finally getting on the property ladder is probably so huge that they don't dare risk moving for a while. They're probably scarred by the whole buying process and don't want to go through it again for at least a few years. So I predict the time between moves is only going to grow, with the uncertainty and volatility of our current market.
It's simply too expensive for many young buyers to afford a house, especially for single people. In a couple, you can probably just about manage it, but a lot of saving and sacrifice is needed. There's not merely the deposit to cobble together, you also have to think about stamp duty and conveyancing fees and all the other associated costs that come attached with buying a house. Can sometimes seem like more trouble than it's worth.
There is no quick-fix solution and I certainly don't have all the answers. But increasing housing supply, making property cheaper, and simplifying the buying process should at least help.
Stop speaking sense, the current jokers we have in charge won't be able to understand.
The main issue, and it's been the main issue for the last few decades now, is that not enough houses are being built to cope with demand. More and more people are being forced into renting for the long-term, causing a vicious cycle where there aren't enough new first-time buyers and too many buy-to-letters, amateur landlords, and rich people with empty properties that never get lived in.
The problem is, people see London and the South East as a cash cow. A place to invest and make profit. Prices won't go back to something resembling normal anytime soon while the capital is still willing to bend over backwards for Russian and Chinese investors.
If house prices were lower, more people would be able to move house. Therefore, allow house prices to fall in order to stimulate more house-ownership mobility. Doing this would allow more loans to be made and more commission by way of sales to be earned.
The fact that house prices have become unaffordable for most, means there must be something wrong with the house-pricing machinery within the market itself. As is always the case in life, whatever is found to be broken needs fixing and knowing how to fix it can also earn anyone knowing that a good living.
The question is: Do estate agents know how to fix the problem Then how.
The fall in tunrover is surely not surprising given the ever increasing cost of moving home. Stamp duty was 1% across the board back in the 80's versus much higher rates today. This just demonstrates that transaction taxes kill market liquidity. Whilst stamp duty receipts may be rising, surely at lower levels we would see an increase in liquidity and the same level of revenue for the government as people would be prepared to move more frequently.