{"id":443,"date":"2017-10-09T19:22:08","date_gmt":"2017-10-09T18:22:08","guid":{"rendered":"http:\/\/glastonburypropertynews.co.uk\/?p=443"},"modified":"2017-10-09T19:22:08","modified_gmt":"2017-10-09T18:22:08","slug":"12-drop-in-mendip-people-moving-home-in-the-last-10-years","status":"publish","type":"post","link":"https:\/\/glastonburypropertynews.co.uk\/?p=443","title":{"rendered":"12% Drop in Mendip People Moving Home in the Last 10 Years"},"content":{"rendered":"

Back in the early 2000\u2019s, between 1 and 1.3 million people moved each year in England and Wales, peaking at 1,349,306 home moves (i.e. house sales) in 2002. \u00a0However, the \u2018credit crunch\u2019 hit in 2008 and the number of house sales fell to 624,994 in 2009.\u00a0 Since then this has steadily recovered, albeit to a more \u2018respectable\u2019 899,708 properties by 2016. \u00a0This means there are around 450,000 fewer house sales (home moves) each year compared to the noughties. \u00a0The question I ask myself is why are there fewer house sales?<\/p>\n

To answer that, we need to go back 50 years. \u00a0Inflation was high in the late 1960\u2019s, 70\u2019s and early 80\u2019s. \u00a0To combat this, the Government raised interest rates to a high level in a bid to lower inflation. \u00a0Higher interest rates meant the homeowner’s monthly mortgage payments were higher, meaning mortgages took a large proportion of the homeowner\u2019s household budget. However, this wasn\u2019t all bad news since inflation tends to erode mortgage debt in \u2018real spending power terms<\/em>\u2019. \u00a0As wages grew (to keep up with inflation), this allowed homeowners to get even bigger mortgages. \u00a0At the same time their mortgage debt was decreasing, therefore allowing them to move up the property ladder quicker.<\/p>\n

In the late 1990’s and early noughties things changed. \u00a0UK interest rates tumbled as UK inflation dropped. \u00a0Lower interest rates and low inflation, especially in the five years 2000 to 2005, meant we saw double digit growth in the value of UK property. \u00a0This inevitably meant homeowner\u2019s equity grew significantly, meaning people could continue to move up the property ladder (even without the effects of inflation).<\/p>\n

This snowball effect of significant numbers moving home continued into the mid noughties (2004 to 2007), as Banks and Building Society\u2019s slackened their lending criteria. You may\u00a0remember the 125% loan to value Northern Rock Mortgages that could be obtained with just a note from your Mum!!\u00a0 This meant homeowners could borrow even more to move up the property ladder.<\/p>\n

So, now it\u2019s 2017 and things have changed yet again!<\/p>\n

You would think that with ultra-low interest rates at 0.25% (a 320-year low) the number of people moving would be booming \u2013 wouldn\u2019t you? \u00a0However, this has not been the case. \u00a0Less people are moving because:<\/p>\n

(1) low wage growth of 1.1% per annum<\/p>\n

(2) tougher mortgage rules since 2014<\/p>\n

(3) sporadic property price growth in the last few years<\/p>\n

(4) high property values comparative to salaries<\/p>\n

What does this mean in Mendip?<\/strong><\/p>\n

In 2007, 2553 properties sold in the Mendip district and last year, in 2016 only 2251 properties sold \u2013 a drop of nearly 12% (so far in 2017 there have been just 1022 properties sold)<\/strong><\/p>\n

Therefore, we have just over 300 less households moving in the Mendip district each year. \u00a0Now of that number, it is recognised throughout the property industry around 80% of them are homeowners with a mortgage. That means there are around 242 mortgaged households a year (80%\u00a0of 302<\/em>)\u00a0<\/em>in <\/em>the Mendip district that would have moved 10 years ago, but won\u2019t this year.<\/p>\n

The reason they can\u2019t\/won\u2019t move can be split down into different categories, explained in a recent report by the Council of Mortgage Lenders (CML). So, of those estimated 242 annual non-movers, based on that CML report I estimate \u2013<\/p>\n

    \n
  1. Around 87 households that aren\u2019t moving due to a fall in the number of mortgaged owner occupiers (i.e. demographics<\/em>).<\/li>\n
  2. Around 34 households that are older generation mortgaged owner occupiers. As they are increasingly getting older, older people don\u2019t tend to move, regardless of what is happening to the property market (i.e. lifestyle<\/em>).<\/li>\n
  3. Around 15 households that mirror the rising number of high equity owner occupiers, who previously would have moved with a mortgage but now move as cash buyers (i.e. high house price growth<\/em>).<\/li>\n
  4. Around 106 households that are unable to move because of the financing of the new mortgage\u00a0or<\/strong>\u00a0keeping within the new rules of mortgage affordability that came into play in 2014 (i.e. mortgage<\/em>).<\/li>\n<\/ol>\n

    The first three above are beyond the Government or Bank of England control.\u00a0However, could there be some influence exerted to help\u00a0the non-movers because of financing the new mortgage and keeping within the new rules of mortgage affordability? If Mendip property values were lower, this would decrease the size of each step up the property ladder. \u00a0This would mean the opportunity cost of increasing their mortgage would reduce (i.e.<\/em>\u00a0<\/em>opportunity cost<\/em>\u00a0=<\/em>\u00a0the step up in their mortgage payments between their existing and future new mortgage<\/em>) and they would be able to move to more upmarket properties.<\/p>\n

    Then there are the mortgage rules, but before we all start demanding a relaxation in lending criteria for the banks, do we want to return to free and easy mortgages 125% Northern Rock footloose and fancy-free mortgage lending that seemed to be available in the mid 2000\u2019s \u2026 available at a drop of hat and three tokens from a cereal packet?<\/p>\n

    We all know what happened with Northern Rock \u2026.<\/p>\n","protected":false},"excerpt":{"rendered":"

    Back in the early 2000\u2019s, between 1 and 1.3 million people moved each year in England and Wales, peaking at 1,349,306 home moves (i.e. house sales) in 2002. \u00a0However, the \u2018credit crunch\u2019 hit in 2008 and the number of house sales fell to 624,994 in 2009.\u00a0 Since then this has steadily recovered, albeit to a […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[58,1,4,3,6],"tags":[18],"_links":{"self":[{"href":"https:\/\/glastonburypropertynews.co.uk\/index.php?rest_route=\/wp\/v2\/posts\/443"}],"collection":[{"href":"https:\/\/glastonburypropertynews.co.uk\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/glastonburypropertynews.co.uk\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/glastonburypropertynews.co.uk\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/glastonburypropertynews.co.uk\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=443"}],"version-history":[{"count":2,"href":"https:\/\/glastonburypropertynews.co.uk\/index.php?rest_route=\/wp\/v2\/posts\/443\/revisions"}],"predecessor-version":[{"id":445,"href":"https:\/\/glastonburypropertynews.co.uk\/index.php?rest_route=\/wp\/v2\/posts\/443\/revisions\/445"}],"wp:attachment":[{"href":"https:\/\/glastonburypropertynews.co.uk\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=443"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/glastonburypropertynews.co.uk\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=443"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/glastonburypropertynews.co.uk\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=443"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}