2018: Year of the first-time mover?

New data from Savills for the BBC puts paid to the idea we are on the cusp of changes to the housing and mortgage markets. In fact the die has seemingly been cast for some time.

Related topics:  Blogs
Rory Joseph and Sebastian Murphy
20th April 2018
Sebastian Murphy Rory Murphy JLM
"For all the focus on first-timers, we now need to seriously consider those above them"

At the start of the year, there was an anticipation – especially after the November Budget and the cutting of stamp duty for first-time buyers – that 2018 would probably be ‘the year of the first-time buyer’. Certainly, the fact we now have more first-time buyers purchasing homes than their second-time equivalent is a real momentum shift, and perhaps more than anything tells you where this market is at.

The recent statistics from Savills, which focused on the number of times people move after purchasing their first home, could be construed as another hurdle for the existing homeowner/second-stepper who wants to move. The stats revealed that 10 years ago people moved on average 3.6 times after their first purchase, now due to a range of obstacles such as increased house prices, stamp duty costs and lending considerations that is down to 1.8.

This is similar to research from Zoopla last year which said the average homeowner now moves only every 23 years, compared to every nine in the late 1980s.

If this carries on, by the time we reach 2028, moving home multiple times might well be considered a practice of the past. Which would spell serious trouble for our housing market and the number of transactions taking place – no wonder removal firms are looking to offer other services; they certainly can’t rely on moving people into their homes, if this continues.

However, as advisers, let’s not suggest the current situation is terrible for us. The Government intervention to support first-timers has clearly had an impact on their numbers – the Help to Buy scheme and now the stamp duty cut has reignited the interest of large numbers of potential new homeowners. We’ve certainly seen that recently, and given this is a permanent cut, and the HTB scheme will continue for some time, then we have to anticipate greater levels of first-timers coming to market if the supply is there.

All well and good. As is the remortgage market at present – it has underpinned both the residential and buy-to-let market (increasingly with product transfers) for some time, and we should not expect any change in that. Especially, if there is an inability to move, or a lack of desire to pay thousands of pounds in stamp duty by moving/purchasing, which seems apparent at the moment.

It’s actually becoming something of a housing market cliché to say, “Why should we move and spend thousands on SDLT when we can use that money to fund extension/renovations”, because it’s true. Above the ladder, what will become of the market if people are unable to move? We should remember if the next generation of first-timers also get to this point, we’d then be in danger of the whole market stalling.

At the moment, there are no incentives for people to move (or landlords, etc, to purchase) – in fact there are some major disincentives to keep them where they are/with the same portfolio levels. Arguably to either coerce the market towards institutional landlords, or to ensure supply is driven to the residential purchaser.

For all the focus on first-timers, we now need to seriously consider those above them – in different areas of the country this could mean people buying anything between £400k and over a £1m - and how the situation is also made worse by the obsession with new-build and the still relatively slow levels of new supply coming to market.

Stamp duty take has been off the charts so far for this Government, but at current transaction levels, this is going to drop and drop quickly. We have seven months until the next Budget but, let us join our voices to the many within the industry, and say that the sector needs looking at, and purchase/moving incentives - not just for first-timers - need to be seriously considered. Whether this is a straight stamp duty cut or something with a little more finesse, like a regional focus, the time to do something will be in 2018.

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