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Starving market of supply – the households that stay put for years
Households are moving home much less often – often waiting two or three decades – and starving the market of supply.
Hometrack said this morning that in cities, the average time between one move and the next has risen markedly.
In the 1980s, the average house was changing hands every ten years and this increased to an average of 14 years between 2003 and 2007. This has now climbed to an average of 21 years across all cities and is as high as 28.9 years in Liverpool. In Birmingham, people wait 25.8 years between moves, and in London 20.7 years.
In every singe one of the cities tracked by the organisation, times between moves have increased since the period 2003-7.
Richard Donnell, director of research at Hometrack, said: “Low rates of housing turnover create housing scarcity and are keeping an upward pressure on house prices.
“One factor driving housing scarcity has been a marked decline in the proportion of housing sales by existing mortgaged home owners – down to just 35% of all sales in 2014 – almost half the level seen in 2007.
“This group owns half of all owner-occupied housing but fewer moves by existing mortgaged home owners is starving the market of a source of new supply.
“Higher moving costs, and an inability or unwillingness to finance a home purchase, are all factors driving fewer moves by existing home owners.
“The shift to a low inflation environment also has an important longer-term impact as it erodes mortgage debt more slowly than when inflation is higher.
“Households cannot rely on inflation to shrink their debt in real terms as much as they did in say the 1980s, meaning longer periods between moves is a trend that is here to stay.
“Growing illiquidity of housing is a major challenge for the new government and is set to make house prices more volatile than in the past.”
http://www.propertyindustryeye.com/starving-market-of-supply-the-households-that-stay-put-for-years/
