The number of people moving home in the UK has fallen for the first time in five years with home movers seeing prices rise by 7% in 2016, according to new research.
The number of home movers is estimated to have reached 354,000 in 2016, down 4% from 2015 the first annual decline since 2011, the latest home mover review report from Lloyds Bank shows.
It reveals that home movers are now paying an average of almost £300,000 for a home, some £291,777, a rise of 7% on a year ago and average home needs a deposit of almost £100,000 which rises to £192,000 in London where homes are so much more expensive.
They are also having to take out a mortgage for longer with a rise in those seeking a loan for more than 25 years. In 2016, 39% of mortgages were for a term of between 25 and 35 years.
Overall, the current number of home movers has grown by 12% since the lowest point of the recent housing downturn in 2009 when the number of people moving home was 315,000, the second lowest since records began. However, the current figure is 50% below the level of 712,000 a decade ago.
‘Despite favourable economic conditions including record low mortgage rates, high employment levels and rising real pay growth, the number of home movers fell in 2016 for the first time in five years,’ said Andrew Mason, Lloyds Bank mortgages director.
‘Whilst higher prices will have lifted equity levels for many current owners, the low availability of the ’right type‘ of homes for those looking to move up the housing ladder may have constrained market activity,’ he added.
He explained that the ability of home movers, particularly those in their first homes, to move on is an important component in the housing market as it increases the supply of properties, providing homes for new first time buyers.
Details from the research show that the average price paid by a home mover fell to £199,645 at the depths of the housing downturn in 2009 but since then has grown steadily by 46% or £92,000.
Most regions across England and Wales have also seen average property values increase significantly since 2009. In London, home movers have seen the average price rise by 75% or £240,977 to £560,946, the highest on record.
The rise in London is three and a half times higher than in Northern Ireland and £165,407 higher than the second most expensive region which is the South East. Only Northern Ireland has an average price paid by home movers that is lower than in 2009, down by 3% or £4,187.
Rising house prices have been a key factor in driving up average home mover deposits to £96,968, an increase of 33% or £23,978 since 2009. Over the past year, the average deposit has grown by £5,640 or 6%.
There are four regions, all in southern England, where the average deposit put down by home movers has gone past the £100,000 mark. In London, home movers are, on average, putting down £192,432 to move to the next rung of the housing ladder, an increase of 74% or £82,015 since 2009. By comparison, home movers in Northern Ireland have seen average deposits fall by 25% from £60,409 in 2009 to £45,371, the lowest in the UK.
The average national deposit of £96,698 is equivalent to 33% of the average price of a typical home mover property, down from 36% in 2009. The current percentage is unchanged compared to a decade earlier. In cash terms the average deposit in 2006 was £81,921, some £14,777 lower than in 2016.
Over the past decade there has been a trend amongst home movers to choose a longer term mortgage, which extends beyond the traditional 25 year term. In 2006 some 83% of home movers had a mortgage term of between five and 25 years, whilst the remaining 17% were for over 25 years. In 2016, 39% of mortgages were for a term of between 25 and 35 years, while the number of mortgages for terms of five years up to 25 years fell to 61%.
The report points out that record low mortgage rates have helped reduce this cost as a proportion of home movers’ overall outgoings. In the fourth quarter of 2016 mortgage payments accounted for 38% of home movers’ disposable earnings, close to the long term average of 40%. This is a substantial improvement since the peak in summer 2007, when average mortgage outgoings accounted for 57% of home movers’ disposable income.