The changing face of the UK’s housing market means the average turnover of a property has almost trebled since the 1980s from eight to 23 years, according to the Intermediary Mortgage Lenders Association.
Its report, called The New Normal: One year On, shows that annual turnover of the private housing stock has fallen from above 12 per cent to only 4.5 per cent over the last three decades. As a result, IMLA’s analysis indicates the ‘average’ home currently changes hands once every 23 years compared with every eight years during the 1980s.
The IMLA report argues that low housing turnover is driven by a combination of people buying their first homes later; by a larger private rented sector where turnover is lower; and by the baby boomer ‘hoarding effect’ where middle-aged homeowners are staying put, tying up a large part of the housing stock.
These factors are likely to keep turnover down for the foreseeable future, potentially limiting mortgage lending and restricting access to existing properties.
IMLA’s analysis also shows the estimated contribution of mortgage finance to the total value of UK housing transactions hit a new all-time low of 41.7 per cent last year. It means just £4.17 of every £10 spent on house purchases in 2014 was funded by mortgages while cash or equity made up £5.83.
IMLA expects the estimated contribution of cash (including deposits and cash purchases) to housing transactions will exceed 60% for the first time on record by 2016.
“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” warns Peter Williams, executive director for IMLA.
“Inertia in the property market spells danger for future owner-occupation levels, and the growing influence of cash and equity is sowing the seeds of a permanent social divide” he claims.
