The number of home movers has reduced by -2% creating a shortage of properties for first time buyers and higher prices.
The latest report by Lloyds Bank shows the number of home movers in the first six months of 2017 are down -2% with an impact on first time buyers dampening the market.
Homeowners are struggling to trade up the property ladder creating a shortage of properties with 171,300 home movers in the first half of 2017 compared to 174,300 a year ago.
Since the 2009 low of 117,900, number of home movers has increased 45%, although still remain under half the 2007 high of 327,600.
Andrew Mason, Lloyds Bank mortgage products director said, the number of home movers has stabilised despite continuing low interest rates and rising employment.
First time buyers struggle to find homes
The reluctance of homeowners to move is having an impact on first time buyers finding a suitable home with 157,900 in the first half of 2016 up 11% on the previous year to 162,704 in 2017 up only 3%.
The following table from Lloyds Bank shows the number of home movers and first time buyers for the first half of each year to June 2017.
| Year | Home movers |
First time buyers |
|---|---|---|
| 2007 | 327,600 | 181,500 |
| 2008 | 179,800 | 109,300 |
| 2009 | 117,900 | 72,700 |
| 2010 | 157,100 | 95,500 |
| 2011 | 138,300 | 86,000 |
| 2012 | 152,000 | 100,600 |
| 2013 | 145,500 | 116,300 |
| 2014 | 165,400 | 167,300 |
| 2015 | 156,300 | 140,500 |
| 2016 | 174,300 | 157,900 |
| 2017 | 171,300 | 162,700 |
A decade ago 64% of all house purchases were home movers and this has reduced to 51% in 2017 leaving first time buyers driving housing activity.
The decline in home movers could be due to higher average deposits rising from £68,663 in 2012 to £96,109 in 2017 with Londoners in the capital putting down £188,916 or four times the national average.
In contrast there has been a strong rise in the number of first time buyers rising 94% from the low of 86,000 in 2011 to a high of 167,300 in 2014, although the numbers have decreased since.
Property prices stagnating the market
There are a number of factors stagnating the market, more people are paying off their mortgages and not moving, supply is at historic lows with a shortage of suitable homes and the higher cost of moving home, says Mr Mason.
The average prices paid by home movers have increased from £206,122 in 2012 to £290,991 in 2017 or a rise of 41%.
In London home movers have seen average house prices rise 56% from £359,679 in 2012 to £561,032, the highest in the UK and 41% higher than the South East at £397,452, the second most expensive.
The cost of moving is also high with stamp duty land tax (SDLT) as a percentage of property price for residential homeowners and buy-to-let landlords as the following table shows.
| Property Values | Standard Rates | Buy-to-Let Rates |
|---|---|---|
| Up to £125,000 | 0% | 3% |
| £125,000 – £250,000 | 2% | 5% |
| £250,000 – £925,000 | 5% | 8% |
| £925,000 – £1.5m | 10% | 13% |
| over £1.5m | 12% | 15% |
To buy the average London property home buyers must pay stamp duty which would cost them £18,051.
The rise in house prices allows the older equity release buyer to stay in their home while accessing the wealth using a lifetime mortgage rather than downsizing, taking further suitable homes out of the market.
For remortgage buyers the higher prices give them an opportunity to release capital which they can use to improve their home such as adding an extension, rather than moving to a new home.
What are your next steps?
Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or are a buy-to-let investor.
For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property to consolidate debt, holidays or even give to a family member.
Start with a free mortgage quote or call us and we can take your details. Learn more by using the property value tracker chart, mortgage cost calculator and equity release calculator.
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