The typical home now remains in the same hands for 23 years – three times as long as in the 1980s, according to an analysis of transaction data carried out by specialist mortgage lenders.
As first-time buyers become older, housing stock has fallen into the private rented sector, and middle-aged homeowners opt to stay put in family homes, the annual turnover of homes has fallen from more than 12% of stock three decades ago to an average of 4.5% in the years since 2010.
The Intermediary Mortgage Lenders Association (Imla), which represents lenders who offer loans through mortgage brokers, said the factors behind the drop were likely to keep turnover down for the foreseeable future.
As well as limiting mortgage lending, this will restrict would-be buyers’ access to existing properties, the organisation said.
For more than a year, surveyors and estate agents around the UK have been reporting a limited supply of housing stock coming onto to the market, and this has helped to keep prices high despite a fall in demand from buyers.
Peter Williams, Imla’s executive director, said it posed a problem for those who wanted to enter the market.
“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.
Neal Hudson has done a separate analysis showing that turnover of housing stock peaked in 1989 when just under 13% of private homes changed hands. In 2009, the figure fell to just 3.9%, but it recovered to 5.4% in 2014.
“Lower turnover levels are a consequence of both the credit crunch but also the affordability pressures preventing many prospective purchasers from getting on the housing ladder,” he said.
“We expect home ownership to become even more concentrated within older age groups (who move less often) and private renting to continue increasing. Therefore housing turnover is unlikely to recover to levels seen in 2007, let alone the late 1980s.”
Hudson said that historically, private developers had started one home for every 10 transactions so “this has important implications for private house building … Until we figure out how to break this link, we urgently need to build more homes of all tenures.”
Imla also found that the proportion of the total value of transactions supported by mortgages fell to an all-time low in 2014.
It said an estimated 41.7% of transactions were funded with loans, meaning £5.83 of every £10 spent on house purchases in 2014 came as cash.
It said parts of the market, particularly in central London had become “decoupled from the influences of mortgage availability and control”, and it expected mortgage share to continue to fall in the coming years, despite the likelihood that lending would increase.
In 2016 it said it expected the contribution of cash, including deposits and full cash purchases, to housing transactions to exceed 60% for the first time on record.
Williams 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.”
