Number of Stamford house moves drops 16.3% in 10 years

Back in the early 2000’s, between 1m-1.3m people moved house each year in England and Wales, peaking at 1,349,306 in 2002. 

However, in 2008 the ‘credit crunch’ hit and a year later the number of house sales fell to 624,994. 

Since then, this has steadily recovered to a more ‘respectable’ 899,708 properties by 2016. 



That’s around 450,000 fewer house sales/moves each year, but why?

 
50 years ago, inflation was high.  To combat this, the government raised interest rates to a high level.  Higher interest rates delivered higher monthly mortgage payments, thereby taking a large proportion of the household budget.  This wasn’t all bad news since inflation tends to erode mortgage debt in ‘real spending power terms’.  Consequently, as wages grew (to keep up with inflation), this allowed homeowners to get even bigger mortgages.  At the same time their mortgage debt was decreasing, therefore, allowing them to climb the property ladder quicker.

In the 1990’s and 00’s, UK interest rates tumbled as inflation dropped.  Lower interest rates and low inflation, especially during 2000-2005, meant we saw ‘double digit’ growth in the value of UK property.  This inevitably meant all the homeowner’s equity grew significantly, assisting them in scaling the property ladder - even without the effects of inflation.  This continued into the mid noughties, as banks and building societies slackened their lending criteria, further encouraging home movers to borrow more and move again.

So, now it’s 2017 and things have changed yet again…

With ultra-low interest rates at 0.25% (a 320-year low), it is feasible to think that the number of people moving would be high.  However, this has not been the case.  Less people are moving because of low wage growth of 1.1% pa, tougher mortgage rules, sporadic property price growth and high property values comparative to salaries.

In 2007, 3,258 properties sold in the South Kesteven District Council (SKDC) area, whereas in 2016 only 2,727 properties sold – a drop of 16.30%.

There are just over 530 less households moving in the SKDC area each year.  Of that number it is recognised that around 4/5 of them are homeowners with a mortgage.  That means there are around 435 mortgaged households a year (4/5 of 530) in the SKDC area that would have moved 10 years ago, but won’t this year.
 
The reason they can’t/won’t move can be split down into different categories, explained in a recent report by the Council of Mortgage Lenders.

Of those estimated 435 annual SKDC non-movers:

157 households a year aren’t moving due to a fall in the number of mortgaged owner occupiers (i.e. demographics).

Another 61 households a year are of the older generation mortgaged owner occupiers.  With maturity of age, the inclination to move is less, regardless of what is happening to the property market (i.e. lifestyle).

Approx. 26 households are high equity owner occupiers, who previously would have moved with a mortgage but now move as cash buyers (i.e. high house price growth).

Finally, there are 192 mortgaged homeowners unable to move because of the financing of the new mortgage or keeping within the new rules of mortgage affordability that came into play in 2014 (i.e. mortgage).