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Daily Mirror
Daily Mirror
Business
James Andrews

Older homeowners creating house price problems for the entire country

In the past year average house prices have moved just 0.3% on average, Nationwide figures show, to stand at £217,663 in July.

And one of the biggest reason for this lack of movement in any direction is simple.

People are simply staying put longer.

Nationwide chief economist Robert Gardner said: “One of the key factors behind the low turnover rate is the continued weakness in home mover activity, which is still less than half the levels prevailing in 2007.

“By contrast, first-time buyer transaction numbers have now almost recovered to pre-crisis norms."

And while it's good to see more people buying their first homes, without more people moving from their existing ones, problems are building up.

There's not as much for sale at the moment (Bloomberg)

Low turnover presents a series of problems for everyone.

The first, and perhaps most obvious, is that there are fewer homes for sale, so less choice for people looking to buy.

That also means less competition for sellers and makes any adjustment of prices - up or down - slower.

And that's left the entire market in "protracted limbo" according to Jonathan Samuels, chief executive of property lender Octane Capital.

“Checking the property portals is like watching paint dry. New properties are few and far between."

No change here (Getty Images)

There's another problem building up too, though, the longer people stay in their homes, the less appropriate those homes are.

Young couples have children, but not enough bedrooms. Older homeowners have bedrooms, but their children have moved away.

Jobs change, making homes less convenient, while - sadly but inevitably - friends and family that made a location attractive die or move away.

While you can fix some of these problems by changing your home, others are less simple to deal with.

“A possible consequence of the low rate of churn is that the housing stock is not being utilised as effectively as it could be," Nationwide's Gardner said.

"A noticeable trend over the past decade is the steady increase in the proportion of ‘under occupied’ properties, defined as those with two or more spare bedrooms."

Huge numbers of homes have two or more spare bedrooms (Getty)

Ironically, one of the reasons fewer people are moving is that there aren't as many homes on the market.

If you'd like to move closer to work, or friends, but aren't seeing anything you fancy for sale near there, you're less likely to put your home on the market after all.

Another reason is the cost of moving.

Fees, tax and more mean that in many cases it's just cheaper to fix the home you're in than move somewhere new.

But there's another reason too - and it's nothing to do with Brexit - homeowners are getting older.

People are holding on to homes longer (Tetra images RF)

“Alongside the rise in under occupation, there has been a marked decline in home ownership amongst younger age groups (in particular, those aged 25-34 and 35-44)," Gardner said.

"Under occupation tends to be less prevalent amongst younger households, whereas around two thirds of properties owned by those aged 65 or over have two or more spare bedrooms."

But as well as having more spare bedrooms, older homeowners move less often. After all, over 65s are much less likely to need room for more children or to move for work reasons.

“The declining proportion of younger owner occupiers may also be impacting home mover activity, as younger households tend to move more frequently," Gardener said.

"For example, for those aged 35-44 owning with a mortgage, the average length of time in their current property is 6.8 years, while for those aged 55-64 it is 17.2 years.”

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