22nd May 2015
Illiquidity in the housing market has been highlighted by research of Hometrack that shows the period between home moves in some cities is as long as 28 years.
Research by Hometrack shows there has been a 30% drop in moves by homeowners with mortgages over the past 10 years. This illiquidity is driving up house prices as no new stock is coming to market.
Proving the point, official figures showed house prices increased 9.6% in the year to March 2015.
Hometrack analysis shows the average house changed hands every decade in the 1980s and between 2003 and 2007 this moved to an average time of 14 years. However, price rises mean the average move time is 21 years, and in Liverpool the average is 28 years.
Those living in Birmingham are likely to stay put for 25 years and people in Leicester and Sheffield hang on to their homes for 24 years.
In Scotland the picture is different with properties in Edinburgh, Glasgow and Aberdeen changing hands every 17, 16, and 14 years respectively.
Belfast has the lowest period of exchange at 12 years.
Of all properties sold in 2014, just 35% were sold be existing mortgaged homeowners even though this group owns half of all owner-occupied housing.
Richard Donnell of Hometrack said: ‘Higher moving costs, and an inability or unwillingness to finance a home purchase are all factors driving fewer moves by existing homeowners.
‘The shift to a low inflation environment also has an important longer-term impact as it erodes mortgage debt more slowly than when inflation is higher. Households cannot rely on inflation to shrink their debt in real terms as much as they did in say the 1980s meaning longer periods between moves is a trend that is here to stay.’
He added that growing illiquidity in the housing market was a ‘major challenge for the government’.