First time buyers rejoicing already?
We hope that first time buyers, as others, will enjoy price falls and greater volumes of property available as the year goes on, all other things being equal, helped by the turning point that looks imminent. Many commentators, perhaps in despair at the continuing dire news in the UK housing market, have greatly played up the increase in proportion of first time buyers observed in December.
'First time buyers 'take advantage' says NAEA report
The National Association of Estate Agents' December housing market report stated this, about first time buyer numbers:
"First Time Buyers took it upon themselves to take advantage of the quieter month, as the percentage of sales made to the group increased to 32%...This is the highest rate seen since September 2016 when it stood at 32% again, and up from 27% in November."
The increase in first time buyer share of the total market is cause for optimism and a number of market observers have stated the importance of Chancellor Hammond's introduction in November of first time buyer stamp relief in encouraging this.
The NAEA report itself provided further context however, stating that demand for housing fell by 20% in December, with 268 prospective home-owners registered per member branch, down from 333 in November.
"Housing demand shrank 20% in December." (NAEA)
We're buying later and borrowing for longer: English Housing Survey
The recent English Housing Survey (Headline Report 2016-17) gave evidence of some stark changes in the nation's housing habits.
In 2016-17, the average age of first time buyers was 33 years, up from 30 in 2006-07, according to the survey. Alongside this, 52% of first time buyers now have a mortgage of 30 years or more, up from 40% last year.
The latter figure indicates that mortgage lenders are starting to adjust to the reality of people buying later, working to a greater age and living longer. Those at this hypothetical average first time buying age who've recently taken out a 30-year plus mortgage will, on present projections, be subject to a retirement age of 68, giving them in theory enough time to pay their mortgages off.
Huge drop in home ownership levels for under-45s
The English Housing Survey revealed that the number of under-45s owning their own homes has dropped by more than a million since 2010.
In 2009/10 some 4.4 million under-45s owned a property in England; that figure fell to 3.41m by 2017.
Owner occupation by those in the 25 to 34-years-old age group has gone from 57% in 2006/7 to 37% 2016/17
Source: English Housing Survey January 2018
And people are staying put...
The survey also revealed that whereas 10 years ago, people on average stayed in the same property they owned for 15.8 years, they are now staying in it for 17.5 years.
As we've reasoned in a number of our previous reports, this trend is clearly evidenced by both mortgage and remortgage data.
And house buying is only for the richer first time buyer
The survey also stated that only those first time buyers in the upper two quintiles of wealthiness have sufficient resources, including those from parents and inheritances, to get on the housing ladder.
Mortgages AND remortgages fall: Bank of England
Mortgage numbers continued to fall in December and for the 3rd month in a row, according to the most recent Bank of England statistics.
There were 61,039 mortgages granted in December, which is the lowest mortgage approval rate since February 2015.
While remortgages have seen rises in recent months, they actually fell in December for the first time in 9 months, when some 46,975 were granted.
It seems not only that people are continuing to stay put rather than move, but also, for the moment, people are even 'drawing in their horns' when staying in the same property, perhaps in response to November's 0.25% Bank of England base rate rise.
Clear trouble in the upper reaches of the market
News also emerged of a relative crisis in the luxury property market in London.
It transpires that half of London's new build luxury flats fail to sell, with developers having some 420 towers in the pipeline despite there being up to 15,000 high-end flats still on the market, according to media reports.
According to one prominent estate agent, 58% of property demand in London is for homes priced at below £450 per square foot, but only 25% of homes are being built at this price.
Additionally, those in the middle of the market are also suffering, according to many observers. Another prominent property market professional estimated in media reports that some households would have to spend £250,000 to move 'up the ladder' to a larger house, once transaction costs were added to the property price.
It looks almost as though the key to solving the horrendous impasse in the UK housing market is, all other things being equal, for prices at the top to continue to fall, creating room for the middle to trade upwards which in turn leaves room the first time buyer to get on the ladder. Perhaps 2018 will prove to be the time of the great correction in the UK housing market!
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