Why aren’t people moving? SIMON LAMBERT on the 40% decline in homes changing hands (and why stamp duty made him stay put)
Why aren’t people moving? That was the question posed by Nationwide’s house price report as it highlighted how Britain is moving home less often.
It said that while ‘housing market activity has been broadly stable in recent years’ it remains stuck below the level seen before the financial crisis.
Nationwide’s figures show that each year the number of properties changing hands is currently 5.1% of all homes in the UK.
That’s down a bit on the three-year average of 5.3% but noticeably lower than the 8% rate seen in the years before the financial crisis.
Nationwide’s figures show that each year the number of properties changing hands is currently 5.1% of all homes in the UK, down almost 40% on the level before the financial crisis
The seismic events of the credit crunch and global banking crisis obviously sent transactions plummeting, but they’ve also not managed to claw their way back to where they were.
These figures back up the often largely anecdotal suggestions that British homeowners aren’t making as many moves as they used to.
A drop from 8% to 5% doesn’t sound like much, but that is a near 40% decline in the rate.
Nationwide drilled into the figures by type of property owner and found that while first-time buyer transaction numbers are now almost back to their pre-crisis levels, traditional mortgaged home mover activity is still less than half what it was back then.
Among the other categories of purchases, cash buyers have steadily climbed back to their pre-crisis level, while buy-to-letters had the wind diverted firmly away from their sails by the additional 3% stamp duty charge added in 2016.
The biggest casualty of the decline in transactions has been traditional mortgaged home movers
Nationwide’s chief economist Robert Gardner said: ‘It is less clear why home mover activity has remained so subdued. However, the lack of properties on the market is likely to be a factor.
‘This has led to a less liquid market, which may be deterring some potential home movers from trying to sell their own properties – a trend which becomes self-reinforcing.’
He added: ‘The declining proportion of younger owner occupiers may also be impacting home mover activity, as younger households tend to move more frequently.
‘For example, for those aged 35-44 owning with a mortgage, the average length of time in their current property is 6.8 years, while for those aged 55-64 it is 17.2 years.’
As people get older the average time they have spent in the current property grows
What engaged me with these statistics is that I’m among them. I sit squarely in that 35 to 44 age bracket and my wife and I and our two daughters have now lived in our flat for eight years.
We are eyeing up moving at the moment, but I suspect in the past we would have done it a few years back.
We have fancied a bit more space for a while and although we couldn’t hope to stretch to one of the four storey London Victorian townhouses near us, we could afford a move to one of the two-storey Victorian terraces in the roads behind where we live.
We’re lucky enough to have a decent amount of equity in our home and could have afforded a bigger mortgage to fund such a move, so why have we not made it?
Largely due to stamp duty; a move would mean paying tens of thousands of pounds in tax and I don’t plan on doing that any more often in my life than I need to.
In London and the South East, where house prices are high, stamp duty kills off the idea of the speculative move for many people.
Couple that with high house prices and I reckon at least one move has been taken out of many people’s home-owning lifetimes.
Individually that’s not much, but add all those people not moving together and there is an effect that distorts the property market – and appears to have created something of a vicious circle.
It’s been suggested that people moving less is creating a vicious circle as less homes on the market further discourage moving