Before the recession, there were about 1.6 million home sales a
year in the UK, which plummeted to 860,000 in 2009 but has since
recovered to around 1.2 million. New research (see attached for
full report) suggests that the shortfall is largely the result of
"missing movers" - mortgaged home-owners not moving up the
housing ladder.
The CML commissioned researchers Neal Hudson and Brian Green to
explore the phenomenon. They suggest that "missing movers"
account for about 320,000 of the annual housing transaction
shortfall. They point to a number of reasons for the decline,
including the fact that there are now fewer mortgaged owners, and
they tend to be older and so naturally less likely to move.
However, there are still around 140,000 missing moves that can be
attributed to a decline in the rates of moving among mortgaged
home-owners.
Three factors determine the moving rate among this groups - their
desire to move, sufficient funds, and the availability of a home
they want to buy. Of these three factors, the research suggests
that the availability of sufficient funds - specifically,
sufficient equity - is the dominant factor holding back the
mortgaged mover rate.
The researchers observe that, in many ways, it is not the present
but the past that is extraordinary. For five decades the market
underwent changes that provided an enormous boost to the ability
of people to buy and to own their homes. But expecting a return
to those conditions is unrealistic, they suggest. They conclude:
“The challenges of the future must be tackled on the basis of
the context in which we find ourselves today. That is one of low
interest rates, relatively low inflation, high and rising house
prices relative to the incomes of prospective home-owners, and an
ageing population.
“From our analysis, this combination is unlikely to unlock
broad-based equity building or provide much scope for more
relaxed lending.
“Perhaps fresh, novel policies will emerge that facilitate more
moving in the current much-changed economic environment. However,
in their absence we should expect the foreseeable future movement
among mortgaged home-owners to remain constrained.”
NOTES TO EDITORS
1. The Council of Mortgage Lenders' members are banks, building
societies and other lenders who together undertake around 97% of
all residential mortgage lending in the UK. There are 11.1
million mortgages in the UK, with loans worth over £1.3 trillion.
2. From 1 July 2017, the finance and banking industry operating
in the UK will be represented by a new trade association, UK
Finance. It will represent around 300 firms in the UK providing
credit, banking, markets and payment-related services. The new
organisation will take on activities previously carried out by
the Asset Based Finance Association, the British Bankers’
Association, the Council of Mortgage Lenders, Financial Fraud
Action UK, Payments UK and the UK Cards Association.
