Middle aged homeowners locking aspiring first time buyers out of market
PUBLISHED: 07:36 14 April 2015 | UPDATED: 12:24 14 April 2015
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The average home takes three times longer to change hands than in the 1980s because baby boomers are ‘hoarding’ property, according to a report.
Annual turnover of housing stock fell from more than 12 per cent to 4.5 per cent during the last 30 years, the Intermediary Mortgage Lenders Association (IMLA) found.
The report found that middle-aged homeowners are choosing to stay put for longer, tying up housing stock, while younger people are priced out by the resulting lack of supply, renting for longer and so buying their first homes later in life.
Peter Williams, executive director for IMLA, said: “These figures paint a picture of a housing market where turnover has drastically slowed in the last thirty years.
“Quite simply, in the absence of a sustained rise in housebuilding and improved affordability and turnover, the fact that properties are coming onto the market less frequently severely limits the scope for would-be first time buyers to graduate to owning their own homes.
“Inertia in the property market spells danger for future owner-occupation levels, and the growing influence of cash and equity is sowing the seeds of a permanent social divide.”
Guy Russell, associate partner of Salter Rex in Kentish Town says that an additional factor is that people of all ages are holding on to existing properties when they buy new homes more than ever before.
He said: “There is an increased number of buyers that register with us who own properties that won’t be selling them when they buy a new home. That’s something that we notice more and more every day.
“They don’t tend to be people in their twenties but they’re from all other ages. It probably is the slightly older generation that are doing it more because they’re close to retirement, but I think all generations are doing it. I advise people to consider it.”
The report also found that the contribution of mortgage finance to the total value of housing transactions hit an all time low in 2014.
Only 41.7 per cent of transactions were funded with a mortgage, with the rest being made up of cash or equity.
The IMLA predicted that cash contributions to housing transactions will exceed 60 per cent for the first time on record by next year.
In higher value areas where larger family homes predominate, agents reported that many sellers are downsizing baby boomers hoping to help their adult children on to the property ladder.
Vanita Barany, senior negotiator at Winkworth in Highgate said: “Highgate’s not really a very transient area. People move here because it’s green and their kids go to school here and then they stay.
“That said, we seem to have a lot of downsizers at the moment. A lot of people find that their children can’t afford to move out without help so they have to downsize to lose the kids.
“That’s certainly quite a new thing – twenty years ago people didn’t used to have to live with their parents in their twenties because it was too expensive to rent.”
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