17 April 2012

The State of the Property Market in the United Kingdom

A large number of people in the UK simply cannot afford to move house
according to a survey that is published yesterday. This has an affect on the 
property market just as much as first time buyers not being able to get on 
the housing ladder because it causes things to stall somewhere along the line.

The research commissioned by Countrywide, one of the UK's biggest property
services group is significant. It shows that almost 12% of UK adults are
unable to move home due to financial constraints and for nearly half of 18
to 34 year olds list deposit affordability is the biggest barrier to buying
a property.

And despite the growth in the last 18 months of the private rented sector,
only a third of private rental tenants are happy where they are, indicating
that they are reluctant renters and would probably by a home if they could.

With the UK government having just introduced initiatives like NewBuy in an
attempt to stimulate the housing market, the fact that people can't afford
to move is a bit of a blow.

It is a fairly deep piece of research with over 6,000 UK adults, including
private rental tenants, home owners with mortgages, shared equity stakes,
owner occupiers and those living rent free taking part in the survey.

Asked about their reasons for not moving home, 62% claimed they were happy
where they live, 21% were unable to afford a deposit, 16% could afford
mortgage repayments, 16% list moving costs and fees (e.g. stamp duty) as a
barrier to moving and 12% cited job insecurity as a concern.

Market uncertainty also played less of a part, with only 5% of survey
respondents listing the anticipation of house prices falling as a factor
preventing them from buying a property at this time.

Some 45% of those aged 18 to 34 cited deposit affordability as a barrier to
buying a property, indicating that that deposit affordability is a primary
issue but not the solitary factor preventing house sales. The youngest
respondents also stated that they felt less confident when it came to their
employment prospects, with 18% listing job insecurity as an obstacle. Also,
nearly a third, some 31%, of 18 to 24 olds highlight mortgage repayments as
a reason for not buying.

Encouragingly, homeownership aspirations remain high throughout the UK and
across all ages, with only a third of private rental tenants referencing
happiness with their current property as a reason for not moving. Of those
renting, over half, 56%, of tenants cited deposit affordability as a
barrier to getting on to the property ladder.

This survey suggests that it is not just first time buyers being unable to
get a mortgage and failing to save enough of a deposit that are the issues.
Based on current levels of activity, the average home owner will move house
once every 25 years as opposed to once in every 12 years. Anyone can see
that these levels are unsustainable and with the growth outlook for the UK
economy not good, although a double dip recession is likely to be avoided,
it all leaves the property market stalled and even the government
incentives are not enough at present to raise the game.

Will we ever see another property boom?

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