"Despite favourable economic conditions including record low mortgage rates, high employment levels and rising real pay growth, the number of homemovers fell in 2016 for the first time in five years"
According to the research, the number of homemovers is estimated to have reached 354,000 in 2016 – down 4% from 2015 when homemover numbers totalled 367,300. This is the first annual decline since 2011, following four successive years of growth.
Overall, the current number of homemovers 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 remains 50% below the level of 712,000 a decade ago.
Lloyds has cited increasing house prices and therefore soaring deposits as key reasons behind the decline.
In 2016 the average house price paid by homemovers increased by 7%, from £273,510 in 2015, to a record high of £291,777.
Most regions across England and Wales have seen average property values increase significantly since 2009. In London, homemovers have seen the average price rise by 75% (or £240,977) to £560,946 – the highest on record. This is three and a half times higher than in Northern Ireland (£162,696) – and £165,407 higher than the second most expensive region, the South East (£395,538).
Only Northern Ireland has an average price paid by homemovers that is lower than in 2009; down by 3% (or -£4,187).
Rising house prices have been a key factor in driving up average homemover deposits to £96,968, an increase of 33% (£23,978) from £72,270 in 2009. Over the past year, the average deposit has grown by £5,640 (6%).
However record low mortgage rates have helped reduce this cost as a proportion of homemovers’ overall outgoings. In Q4 2016, mortgage payments accounted for 38% of homemovers’ disposable earnings – close to the long-term average figure (since 1983) of 40%. This is a substantial improvement since the peak in summer 2007, when average mortgage outgoings accounted for 57% of homemovers’ disposable income.
The research also shows that longer mortgage terms have been gaining popularity with homemovers over the past decade.
In 2006, more than four out of five (83%) of homemovers 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%.
Andrew Mason, Lloyds Bank Mortgages Director, said: “Despite favourable economic conditions including record low mortgage rates, high employment levels and rising real pay growth, the number of homemovers fell in 2016 for the first time in five years. 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. Of course, higher prices may explain why more homemovers are opting for longer mortgage terms.
The ability of homemovers, 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.”
Stephen Jury, spokesperson for Plentific, had this to say: “In June 2016, we ran a survey which found that 1 in 5 UK homeowner’s likelihood of selling their property had been affected by the Brexit vote. Consequently, we predicted that homeowners would be more likely to improve their current property than risk moving. Looking at the latest figures from Lloyds Bank, it appears that our findings in June were spot on, as the number of homemovers has fallen for the first time in 5 years.
In 2017, demand for property will continue to cool and, as a result, buyers will be harder to find. This will lead to an increasing number of homeowners deciding to renovate their property rather than moving. It's good news for builders as demand for trade professionals will continue to grow."
