Low Level of House Purchases Continues to Depress the Property Market

The amount of homes being bought by first-time buyers and movers alike has dropped to less than half the level of purchases recorded prior to the economic downturn. While first time buyers continue to struggle to get a foot on the ladder, fewer home-owners have moved house in the last year than in the previous fifteen years.

The English Housing Report, a government survey which garnered public opinion on housing in England, reported that the number of people moving house in 2009-2010 was 63% less than in the previous two years.

Depressed market

The Council of Mortgage Lenders (CML) recent figures showed that house purchases increased by only 700 from April to May this year. The figure of 41,500 purchases is the second lowest for May since the CML started to record data, and is 60% below the average for the month.

Stabilizing at a low level

The CML believes that the property market is stabilising, but is doing so at a consistently low level. The Director General of the CML, Michael Coogan, said,

“Over the coming months seasonal factors are likely to push up lending for house purchase. There is no evidence of any drastic changes on the horizon or any significant shifts in direction for the mortgage market. These stable conditions are expected to continue for the rest of the year.”

Cost of buying prohibitive

The CML statistics show quite clearly why so many people are struggling to buy a house, or neglecting to move from their current home. First-time buyer’s typical deposit is 20%, an average of £25,700; while home movers are putting down an average deposit of 31%, equivalent to an astonishing average of £57,750.

Desire for home ownership


The desire amongst people in this country to own their own home has not been diminished however, as the data from the English Housing Report shows. 86% of people surveyed would buy their home if they had a free choice; yet 49% believed that house prices were too high in their area, reinforcing the idea that many are simply unable to find their way onto the property market.

Fewer mortgages

This is also recognised in the figures relating to the type of home owner, as there more outright owners and fewer people buying with a mortgage. In the last ten years the number of houses owned outright increased from 5.6 million in 1999 to 6.8 million in 2010; an increase of 20%. In the same period the number of houses bought using a mortgage reduced from 8.5 million to 7.9 million; a drop of 7%.

Mortgage market conditions

While CML don’t expect any significant change to the mortgage market, Michael Coogan did add,

“Funding market conditions appear a little more positive; for example, recent securitisation deals suggest confidence has returned as investors regain their appetite to invest in bonds backed by mortgage assets. Overall this is a positive influence on mortgage market conditions.”

Falling prices aid recovery

As house prices continue to fall, more purchases are being recorded in areas that are subject to the biggest drop in price, suggesting that in these regions buyers are being tempted back into the market. While in areas such as London, where prices have increased by 5% since June 2010, growth of purchases has been much slower.

The English Housing Survey shows that there is still a clear aspiration among people in this country to own their own property; but it also provides a stark reminder that the issues surrounding affordability and access to the market for first-time buyers are as prominent as ever.

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