10th April 2015
UK property is changing hands less frequently than it did thirty years ago as babyboomers hoard houses and first-time buyers jump onto the ladder later in life.
Analysis by the Intermediary Mortgage Lenders Association (IMLA) shows over the average buyer has held onto a property for 23 years before selling it, while in the 1980s, the average buyer only held onto a property for eight years.
IMLA believes the increase is due to the ‘hoarding effect’ of babyboomers, which sees middle-aged homeowners who have built up a large chunk of equity thanks to steep house price rises, shy away from selling.
Housebuilding failing to keep up with demand for homes has also led to a slowdown in property turnover as well as younger people renting for longer and buying their first home later in life than previous generations – meaning rental properties stay in the hands of landlords for longer.
Peter Williams, executive director at IMLA, warned that the slowdown in the market could increase the social divide.
‘These figures paint a picture of a housing market where turnover has drastically slowed in the last 30 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,’ he said.
‘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. Having said that, we will see some continued growth in mortgage lending – and as the market stabilises and wages rise, we may also start to see affordability improving.’
IMLA’s report shows that cash made up a bigger proportion of money spent on house purchases than equity – pointing to the fact that wealthy cash buyers were able to secure properties more easily than those who need a mortgage.
Just £4.17 of every £10 spent on house purchases last year was funded by mortgages and cash and equity made up £5.83.