An analysis of the property market from the last thirty years has found that homeowners tend to own the same home for an average of 23 years before deciding to sell it. This is nearly three times longer than in the 1980s, when properties used to change hands every eight years.
According to the report from the Intermediary Mortgage Lenders Association (IMLA), the low housing turnover is down to the baby boomers “hoarding effect”, more people renting privately, and people now tending to buy their first homes later on in life.
The IMLA suggest that one of the main causes of the huge decrease in turnover is caused by the lack of house-building, as the supply of available houses cannot keep up with the demand, and the younger generation are struggling to jump onto the property ladder, and ending up renting for a much longer time than in previous years.
The report, which examines trends within the mortgage and housing markets, found that the annual turnover of the private housing stock decreased from 12% to just 4.5% over the last thirty years. It also found that cash made up a bigger proportion of money spent on a house purchase than mortgages.
Only £4.17 of every £10 that was spent on a house purchase last year was funded by a mortgage, with cash or equity making up the other £5.83. Peter Williams, executive director for IMLA, warned that this might be sowing the seeds of a social divide.
When asked about the results of the report showing how hard it might be for first time buyers to get on the property ladder, he said:
‘Quite simply, 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.'
The report also demonstrated how the mortgage market recovery had been dampened in the past year due to less housing affordability and much tighter lending restrictions since the implementation of the Mortgage Market Review in April and the macro-prudential changes prompted by the Financial Policy Committee in October.
Gross mortgage lending had seen a 36% increase year on year in January 2014, but it was then down by 2% in December and January 2015 saw an overall decrease of 8% annually. The average house price is still very high, and is now at £192,970, which is £788 more than last month, according to the latest data released by Halifax.
The demand for mortgages from borrowers has significantly decreased in the first three months of 2015, and lenders have seen demand decrease more rapidly than at any point since the financial crisis in 2008.