Currently, homeowners stay in their homes an average of 20.7 years in cities across the UK. Less than ten years ago that average was 14.3 years.
So why the significant change? Why are homeowners staying put?
Let's look at some of the factors keeping people home for longer:
House prices are still going up:
With the price of homes going up and up, it is more difficult for owners to sell their home and move up in the market. The rate of house price growth and income growth has grown apart so significantly that the median house price in the UK is 7.7 times that of median income. Thus, for many, it is simply not possible to move up.
Moving home is expensive:
Stamp duty. This section could stop with just those two words. However, let's understand how severe this tax is for buyers. Firstly, this is a tax on money that you have already been taxed on. Second, this is out of pocket money; you cannot include this in your mortgage. Third, for the median house price in London, a buyer would be paying £13,322 in stamp duty alone! Lastly, there are also the mortgage and solicitor’s fees that could be a couple more thousands of pounds.
There are fewer new homes:
Fewer homeowners are enticed to sell their current homes and move into a new build as there are fewer new build homes available, about 50,000 fewer new homes built a year now compared to the 80's.
Moreover, of these new homes, we are not building enough to meet the demand for new homes, a gap between delivery and demand of nearly 80,000 homes a year so there is intense competition for those new homes being built.
We are an ageing population:
Older people are less likely to make significant life changes. There is also little to no incentive for older Britons to move, in fact moving could increase their living costs through higher council tax charges.
There is less choice:
Data from RICS has revealed that there are fewer and fewer listings on the market. This means less competition between sellers and fewer options for buyers. Rates of listings reached their lowest levels since RICs started keeping these records in 1978.
There are also further studies that have been done that show that fewer new listings have a significant link to the number of homes sold. See the study here: London School of Economics - Decision to Move - in simple terms for me, the fewer choices people have when they consider moving, the less likely they are to move. If they cannot find a better option than what they have, then why would they move?
In summary, there are five reasons why people are choosing to stay longer in the homes they own.
- Cost of buying
- Less new builds
- an Ageing population
- Less Choice.
Affordability, Cost of buying, Less new builds, an Ageing population & Less Choice. Moreover, with little of this looking like it will change shortly, I expect that people will continue to stay longer in their homes.
Any other ideas on why people are now choosing to stay so much longer where they own? Let me know.