11 November 2015

What’s happening with home mover activity?

4 minute read

  • The number of house sales is growing gradually
  • There has been a growth in the number of cash buyers
  • However, people with a mortgage don’t appear to be moving

The housing market is recovering, but it looks quite different to how it did before the financial crisis of 2007. Nationwide’s Senior Economic Analyst, Andrew Harvey, looks at what’s changed.

There’s been a gradual recovery in housing market activity. In the twelve months to June around 1.2 million homes were bought (and sold), which works out as about 1 in 20 households transacting during the year. That may sound a lot, but it’s still around 30% below the 1 in 13 households who used to move house in a typical year before the financial crisis in 2007.

The picture is even more mixed when we look at the types of transactions taking place. The number of cash purchasers (c.440,000 of them in the 12 months to June) is now above its pre-2007 level. By contrast the number of people buying a home with a mortgage (including buy to let) is still down around 40%. Within this category, the type of transaction that is down the most is not - as you might expect - first-time buyers, but people moving house that already have a mortgage. The number of home movers is still only half the level seen in 2007.

In the rest of this post we look to explore what might be behind this trend.


Does construction “supply” the answer?

“The average stock of properties on surveyors’ books is at a record low”

One possible explanation is the lack of properties on the market. The Royal Institute of Chartered Surveyors (RICS) report that the average stock of properties on surveyors’ books is at a record low on data extending back to the 1970s (see the chart below). In the three months to September, the average number of properties per branch was just 47, down around 20% on last year.


There is probably something of a ‘chicken and egg’ situation here, with potential sellers reluctant to put their own properties on the market because of the lack of suitable properties for them to buy. But a lack of homes being built is also aggravating the situation.

While construction has picked up over the past year, it still remains very weak. Only 100,000 houses were built in England in the twelve months to June 2015 - 35% less than 2007 and less than half the c.230,000 needed to keep up with the natural increase expected each year.

Schemes such as Help To Buy and the recent proposals for starter homes aim to make new build more attractive and accessible to potential first time buyers, but does little to help existing home owners who may be struggling to ‘trade up’.

Are we using what we’ve got efficiently?

There is also a question around whether the existing housing stock is being utilised effectively. Official data suggests that nearly half of owner occupied properties in England are ‘under occupied’, that is to say they have two or more spare bedrooms. Compare this with renters, where less than 20% have the same amount of spare space.


The data shows that older people are more likely to under-occupy housing, in part because they are unable to ‘downsize’ to homes that might better suit their needs. Those who are looking to downsize may also be competing with first time buyers and investors for smaller, less expensive properties, placing further pressure on supply.

What’s the answer?

All of the above factors are probably playing a role in dampening the number of home movers, but they aren’t convincing as a complete explanation. The situation has been going on too long to be a purely chicken and egg phenomena. The lack of supply is undoubtedly a factor, but a shortage of housing has characterised the UK housing market for a prolonged period, as has the under-occupation issue (in the UK we clearly love spare bedrooms!).

In the next post, we’ll examine some other factors that might help explain the dearth of home movers, including whether people are deciding to improve their home rather than move...

About the author


Andrew Harvey is a Senior Economic Analyst in Nationwide’s Economic & Market analysis team. His particular areas of expertise are the UK housing and mortgage markets and house prices.

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