MortgagesAug 15 2016

Homemover market at highest level in nine years

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Homemover market at highest level in nine years

The number of people moving house increased by 9 per cent in the first six months of 2016, compared with the same period in 2015, according to Lloyds Bank.

Based on the group’s database, the Council of Mortgage Lenders, the Office for National Statistics and the Bank of England, 174,700 people have moved up the housing ladder in the first six months of this year, as rising house prices have given homemovers a higher level of deposit for their next property.

This figure compares with 160,900 in the same period last year and is the highest level since 2008, when the number of homemovers reached 179,800 over the same six month period.

Since hitting a market low of 117,900 in the first half of 2009, the number of buyers moving along the housing ladder has grown by 48 per cent, although current numbers still remain at around half the pre-crisis level of 327,600 in the first half of 2007.

Housing affordability for second steppers – calculated as the average price of a typical second stepper home less their current equity position as a ratio of average earnings – stood at 6.5 times gross annual average earnings in June.

On this measure, affordability has improved over the past five years from 7.3 in 2011.

Second stepper home owners are those still living in their first home but looking to take their next step up the property ladder, and therefore a subset of the homemover market.

Whilst a mortgage term of 25 years has been the norm for some time, many homemovers are increasingly taking out mortgages where payments are spread over a longer period, Lloyds found.

In the first half of 2011 the proportion of homemovers taking up a 25 to 35 year mortgage stood at an average of 9 per cent. For the same period in 2016 this figure had doubled to almost one in five (18 per cent). Over the same period, the share of mortgages with a 20 to 25 year term dropped from 36 to 29 per cent.

Over the past five years, the average price paid by homemovers has grown by 38 per cent from £206,997 in 2011, to £261,5504 in June 2016 – an increase of £78,609.

In London the average homemover price has grown by 55 per cent since June 2011 to £540,440 – the largest increase in the UK.

The capital is followed by the south east, where homemovers now pay, on average, £382,324 – an increase of 45 per cent in the past five years. By contrast, the average homemover price in Northern Ireland has edged up over the same period by just 2 per cent from £156,764 to £159,326.

Mortgage product director Andrew Mason said a favourable economic backdrop, record low mortgage rates and the stamp duty changes have supported the market.

“Higher house prices have also boosted homemover equity levels, which in turn have helped towards the purchase of the next home,” he added.

peter.walker@ft.com