The property market has seen a huge shift in how and when people are buying property in the 21st century, and the latest data shows people are staying put for much longer
Today, the ‘average’ home changes hands every 23 years, a staggering difference from the 1980’s figures; which show people moving, on average, every 8 years (source: http://www.imla.org.uk/)
The reasons behind this are, as usual, never simple. This recent report from the IMLA Intermediary Mortgage Lenders Association (IMLA) believes that more people are putting down roots, particularly the ‘baby boomers’; along with younger people choosing to buy later, so also staying in their first home longer. The report also states that a larger rental sector has had a big effect, with buy to let landlord’s keeping hold of their properties for the long term.
With the latter in mind, it’s worth noting that buy-to-let has been pitched very hard by many as an attractive investment and we will have to see if this continues bearing in mind the recent tax changes announced at the budget. As Belvoir Lettings research tells us, the demand side for rental property continues to grow with an estimated ‘seven tenants chasing every one property.’
Another aspect to consider is the increasing ease of which one can extend a property, which encourages people to stay put rather than move to a bigger home. This is particularly easy at the moment as the government temporarily allowed double extension sizes without planning permission until May 2016. Growing families, with kids at the local school and those wanting to work from home now have greater options for creating more space, so it’s easier to stay put.
All these factors as well as our ageing population who tends to spend 25 years or more in their property means far less properties are coming onto the market for sale. Without a choice of properties to trade up or down to, this also puts people off looking, so can reduce the amount of demand longer term too, leading the market to stagnate.
Peter Williams, Executive Director for IMLA, commented: “These figures paint a picture of a housing market where turnover has drastically slowed in the last thirty years. 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.”
Peter gets to the heart of the matter; the UK is in need of further properties full stop. The government is doing quite a bit to help encourage supply – but only if you are able and want to buy. For example, Communities Secretary Greg Clark has set aside a £26 million fund for house builders to apply to, specifically for first time buyers. Our recent article explains the starter homes initiative where properties will be sold at 20% discount.
With people staying put for longer, the only solution to a much ‘starved of stock’ housing market is to release the land to allow small, medium, large developers to build for sale and institutional investors to build specific long term rental properties, plus boost the supply of social homes via councils and housing associations.
Anything else just papers over the cracks of our housing shortage.