One million is a number that appears to hold continued significance and importance in all our lives.
It remains something of a figure of attainment and a sign of status and achievement: latch on the word ‘pounds’ to ‘one million’ and it is transformed into an even more compelling ideal.
It is 57 years since Cole Porter wrote the song, ‘Who wants to be a millionaire?’ and, regardless of inflation or the increased cost of living, reaching the million pound mark in terms of wealth still carries a real cache, probably as it continues to be perceived as a figure which provides the opportunity for many people to give up work and fulfil their dreams and ambitions.
Not that money is necessarily required to do this, you understand, but for many people it is, and £1m provides the stability and foundation to do these things.
It is within this context that I viewed the latest data from the Council of Mortgage Lenders regarding purchases and was pleased to see further positive progress, to such an extent that 2013 is the first year to breach the one million mark since 2007.
The significant of this should not be under-estimated given the doldrums that the housing market has been in post-credit crunch.
Neither, however, should it be viewed as a victory flag to be waved, given that we have bounced off the bottom but perhaps not as high as we would all like.
To put this into some context, the CML points out that in the 30 years prior to the credit crunch hitting us, the average number of property purchases across that timescale was 1.5 million a year.
Admittedly there will be some considerable peaks and troughs during that time, but averaged out, we are still some way short of that number and therefore it would do us all good not to get too carried away with today’s market.
I say this because this is a marketplace which is currently the beneficiary of a serious amount of stimulus.
The Government is bending over backwards to get the housing market moving again and I have every confidence we will see continued progression over the course of the next 12 months.
We may get close to that 1.5 million average number, but none of us involved in this market should get comfortable with the support we are receiving.
Schemes such as Funding for Lending and Help to Buy are designed to have only limited shelf-life and therefore, with the aid of this support, the market also needs to do a considerable amount of organic healing and growing before the stimulus is turned off.
Another interesting statistic to emerge from the CML with regard to this one million purchase number being hit is the type of purchaser that is predominantly responsible for the activity. In broad terms, the figures can be broken down as: home movers using a mortgage (325k); first-time buyers using a mortgage (270k); cash purchasers (370k); and buy-to-letters using a mortgage (160k).
By my reckoning that breaks through the million mark quite comfortably (1.125m), but it doesn’t quite tell all the story and indeed it shows that some groups are actually struggling to show any improvement.
The home mover group in particular has not shown any real increase since 2007 and this is why we hear much talk about the difficulties facing ‘second steppers’, particularly those that bought at the top of the market before the global crisis hit.
This home mover number was 315k in 2009 and looks likely to be 325k this year – hardly setting the world alight, and perhaps it goes some way to showing why the Government was keen that Help to Buy 2 should be open to all potential purchasers and not just first-time buyers.
There is a recognition here that if those already on the first rung of the ladder have no means to move up, then there will remain a distinct shortage of ‘first-time buyer property’ for this group to move into.
First-time buyers have been a group also in the minds of anyone looking at stimulating this market and it appears to be slowly working. The numbers this year will see a 25% uplift on 2012 and again one can image that the impetus of HTB2 will mean many more first-timers being able to fund purchases next year.
One might also be surprised to learn that cash purchasers are the biggest group when it comes to purchasing – although this may be explained by those who have benefited from rising house prices utilising their equity when purchasing and also the large number of foreign investors and buyers, particularly in London, who purchase with cash.
Finally, buy-to-let purchases have almost doubled since 2009 and again I suspect we will continue to see a concerted rise in their numbers in the years ahead.
Ultimately, it is positive to see an upward trend, and agents will certainly be welcoming the increased activity and appetite to purchase. However, this may be tempered somewhat by the want and need to see increased supply in order to meet this growing demand.
While HTB1 is supporting new-build, there still needs to be continued efforts to build more homes and clearly, as the numbers show, ongoing work in order to get those who have already purchased once on to the next rung of the ladder.
This is not going to happen overnight, but it is critical if we are to remain above the one million mark and forge past that 30-year average.
Rob Clifford is chief Executive of Century 21 UK and group commercial director of Shepherd Direct Group
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