"This perhaps shows the effect that the stamp duty holiday was having, encouraging a different sector of the market to take advantage, when first-time buyers already had the benefit of SDLT holiday."
Homemover numbers had been running at around half of their typical levels in 2005-2007 ever since the financial crisis. However, in Q1 2021 activity leaped by 82% compared to Q1 2020, bringing volumes to a level not seen since 2007.
UK Finance says this rebalancing of the market has been "a peculiar consequence of the pandemic", stating that the current stamp duty holiday is benefitting homemovers and landlords, whereas the majority of first-time buyers across the UK are already exempt.
The strength of this housing market response, coupled with employers adapting their homeworking policies for the long term, points to "at least the potential for a more fundamental shift in the patterns of homebuying", according to UK Finance.
Should this trend prove more permanent and pervasive, UK Finance says it has the potential to "lead to other economic phenomena" including some rebalancing of property prices more evenly across the country, as well as revitalisation of local high streets and wider economies.
While "exceptionally strong everywhere", the data shows that the strongest growth in homemover rates were in the south east, where volumes rose 110% compared with a year ago.
Following around nine years of uninterrupted price growth, half of all mortgaged homeowners have at least 50% equity in their home, and a further third have between 25 and 50%. UK Finance says this is particularly important in the current environment and a key contributor to the strength in homemover activity.
Data from HM Land Registry suggests at least some are cashing in their equity and buying outright, as the latest figures (to December 2020) indicate significant increases in the proportion buying without a mortgage in every region of the UK. UK Finance's data shows many more are using their equity plus mortgage borrowing to achieve space, location and other desirable attributes in a new area.
At the same time as this unprecedented surge in homemover numbers, the buy-to-let sector has also seen significant growth, with mortgages for buy-to-let house purchase increasing by 59% in Q1 2021, compared to a year previously.
UK Finance says the stamp duty holiday has been a significant demand stimulus in the buy-to-let sector, where new purchases attract a 3% second-home stamp duty surcharge on top of the prevailing rate for residential homebuyers.
However, the surge in purchase activity followed a broadly similar regional pattern as for homemovers, with London and the other southern regions showing the strongest growth. This is likely to reflect landlords responding to increased demand from households seeking to move for the same reasons as detailed above for homemovers, but who at this stage are looking to rent properties rather than buy.
Richard Pike, sales and marketing director at Phoebus Software, said: “This retrospective view of the first quarter of 2021 throws up no real surprises, however it is interesting to note that first-time-buyer numbers were outpaced by home movers across the country in Q1. This perhaps shows the effect that the stamp duty holiday was having, encouraging a different sector of the market to take advantage, when first-time buyers already had the benefit of SDLT holiday. It also shows the movement across the regions as quality of living became a priority during the pandemic.
“With the government’s ‘First Homes scheme’ launching, along with the availability of 95% mortgages and the new help-to-buy scheme, we could see the current imbalance between first-time-buyers and home movers leveled. As long as the new homes that are needed for these schemes continue to be built.”
