‘Housing ladder’ is broken at every step

  • 7.5 million1 aspiring homeowners unable to get on housing ladder
  • More than 3 million2 homeowners want to move house but cannot
  • 1 in 5 homeowners age 55+ considered a move but did not.  More than 1 million3 of these homeowners have nowhere to move to
  • Stamp duty bigger barrier for second-steppers than for first or last time buyers.  One quarter (24%) of second-steppers say stamp duty is the reason they can’t move
  • House prices are the top barrier for both getting on and moving up the ladder

The UK’s housing market is broken at every level with everyone from first timer buyers, second-steppers to downsizers struggling, latest research has revealed.

According to the Homeowners Survey 2018, polling over 2000 UK adults online, on behalf of HomeOwners Alliance and BLP Insurance, millions of UK adults are failing to realise their dream of homeownership or are stuck in houses that are unsuitable for their needs as a result of affordability issues and lack of properties.

The study found that while almost three in four non-homeowners (74%) want to own their home one day, affordability problems are preventing them from doing so. The main reasons cited for not being able to buy their first home include: property prices are too high (66%), difficulty saving for a deposit (58%) and difficulty getting a new mortgage (31%).

Affordability is also the biggest barrier for second steppers. The biggest reason for considering a move but not moving among homeowners age 18-54 are house prices/ being able to afford to move (58%).

Of the 1.2 million4 homeowners age 18-54 (second-steppers), who have considered a move in the last two years but did not do so, 50% were moving to find a bigger property, suggesting these homeowners may be in homes too small for their needs.

Worryingly, considering how little they are considered in the Stamp Duty debate, second-steppers (homeowners age 18-54) are more likely than others to say the tax is a barrier (24%). This means Stamp Duty is a bigger concern for second-steppers than for any other segment of the market.

For last time buyers, one in five (20%) homeowners aged 55 or over considered a move in the past two years but have not done so; with lack of suitable housing (46%) the main barrier for following through with the plans.

A massive 46% of these last time buyers cite lack of suitable housing as a reason preventing their move, equating to more than 1 million3 homeowners.

Paula Higgins, Chief Executive, Homeowners Alliance, says:

“These figures show the true scale – and indeed, the breadth – of the problems facing the housing market. Buyers and sellers at every single level are being met with problems and it’s clear that tinkering with just one area will not solve this crisis.“

“The housing market is broken at every level. A massive 74% of people want to own their own homes, yet millions face the realisation that might never happen. At HomeOwners Alliance we’re doing all we can to help those struggling in the market with advice, calculators and tools but there needs to be some drastic action to address this. The government needs to come up with a long-term strategy. If 7.5 million people being locked out isn’t a tipping point, what is?”

Kim Vernau, Chief Executive, BLP Insurance, says:

“A comprehensively integrated approach is needed to cure the ills of the housing market. Government policies such as the abolition of stamp duty for first time buyers may have created positive headlines but it ignores the needs of large swathes of potential buyers. By recognising the interconnected nature of the housing market and implementing policies that will positively affect all, real progress can be made.”

“One of the biggest challenges facing the sector is incentivising elderly individuals living in large, former family homes to downsize. Constructing an adequate stock of purposely-built homes for last time buyers, that meets their specific needs, has the potential to free up housing stock for first and second time buyers and inject much needed impetus into the whole market.”

Key Findings:

Aspiring First-Time Buyers:

  • Aspiration to own is at its highest level in six years equating to 7.5 million1 aspiring homeowners. Nearly three in four non-homeowners (74%) want to own their home one day. With 10 million non-homeowners in the UK, this equates to approximately 7.5 million aspiring homeowners. Figure 1.

  • Affordability is the main barrier to getting on the ladder for aspiring first-time buyers The main reasons cited for not being able to buy their first home: property prices too high (66%), difficulty saving a deposit (58%) and difficulty getting a mortgage (31%). Figure 5.

Second-Steppers:

  • Nearly a quarter (23%) of second-steppers (homeowners age 18-54) considered a move in the past two years but did not do so; equating to 1.2 million4 homeowners.

Half of second-steppers looking to move but not following through, wanted to do so for a bigger property; suggesting these homeowners may be in homes too small for their needs. Figure 3

  • Affordability is the main barrier preventing a move for second-steppers (homeowners age 18-54 who considered a move but did not). Stamp duty and being able to increase an existing mortgage are relatively bigger issues for this group.

The biggest reason for considering a move but not moving among homeowners age 18-54 are house prices/ being able to afford to move (58%).

Second-steppers age 18-54are more likely than others to say stamp duty is a barrier (24%), as well as, difficulty increasing the value of their mortgage (18%). Figure 5

Last-Time Buyers:

  • One in five (20%) homeowners aged 55 or over considered a move in the past two years but have not done so; equating to more than 2 million3 homeowners.

  • Lack of suitable housing is the main barrier among ‘Last-time buyers’, homeowners age 55+ who considered a move but did not proceed

  • 46% cite lack of suitable housing as a reason preventing their move (equating to more than 1 million3 homeowners). Figure 5
  • Nearly two thirds (64%) of homeowners 55+ who considered but did not move say it was difficult to find a property with the characteristics they were looking for. Figure 4
  • Relatively more important property characteristics for homeowners age 55+ than for younger homeowners and aspiring homeowners include: a garden/ outside space (80%), a property in good condition (no major improvements needed) (79%), parking (76%), low running costs/ maintenance (74%), good transport links (61%), proximity to friends/ family (47%), proximity to shops/ restaurants (40%) and living on one level (38%). Figure 6
trend-aspiration-to-own Figure 1: Trend Aspiration to Own (Among Non-Homeowners): 2013-2018 Homeowner Survey

Incidence of moving/ considering a move in last 2 years…% of homeowners
Total HomeownersHomeowners 18-54Homeowners 55+
Have moved20%25%15%
Considered moving but not done so21%23%20%
Have not moved or considered moving40%35%43%
None of these19%16%22%
Don’t know1%1%0%
Sample size:1285561724

Figure 2: Incidence of Homeowners Moving/ Considering a Move

Reasons for considering a move% of homeowners who considered a move but have not done so
Total HomeownersHomeowners 18-54Homeowners 55+
Downsize/ move to a smaller property29%10%47%
Move to a bigger property27%50%6%
Change locations32%33%31%
Other reason12%7%17%
Sample size:267126141

 Figure 3: Reasons Homeowners Want to Move

 

How easy or difficult was it to find a property that had the characteristics that were important to you?% of homeowners who considered a move but have not done so
Total HomeownersHomeowners 18-54Homeowners 55+
Very/ fairly easy16%23%10%
Very/ fairly difficult59%54%64%
Not applicable/ don’t know25%22%27%
Sample size:267126141

 Figure 4: Ease/ Difficulty of Finding Suitable Property

Barriers to moving/ owning% of homeowners who considered a move but have not done so% Aspiring Homeowners
Total HomeownersHomeowners 18-54Homeowners 55+
Property prices too high/ cannot afford to move40%58%23%66%
Lack of suitable housing35%23%46%23%
Moving costs too high (removals, legal fees, estate agent fees etc.)27%28%26%24%
Stress/ upheaval of moving26%25%28%9%
Current home meets needs21%16%26%18%
Stamp duty is too expensive19%24%14%11%
Do not want to move away from friends/ neighbours/ community16%10%23%8%
Concern about any impact Brexit could have on the housing market11%13%10%10%
Difficult to increase value of current mortgage10%18%2%
Difficult to get a new mortgage9%12%5%31%
Can’t save enough for a deposit6%12%1%58%
Other20%19%21%15%
Don’t Know1%1%1%3%
Sample size:267126141600

Figure 5: Barriers to Moving/ Being able to Own

 

Important Characteristics In Property to Buy% of homeowners% Aspiring Homeowners
Total HomeownersHomeowners 18-54Homeowners 55+
Garden/ outside space77%73%80%63%
Property in good condition (no major improvements needed)73%64%79%68%
Availability of parking70%64%76%50%
Spaciousness/ good sized rooms69%71%67%62%
Low running costs (low utility bills, little ongoing maintenance)63%50%74%62%
Good transport links55%47%61%52%
Has several bedrooms50%54%47%38%
Being near parks/ green spaces46%44%48%43%
Being near family/ friends43%39%47%41%
Being near restaurants/ shops34%26%40%30%
Living space on one level/ minimal stairs26%11%38%11%
Being near to work21%36%9%46%
Good local schools18%33%5%23%
None of these1%1%1%1%
Don’t know1%1%1%2%
Sample size:1285561724600

 Figure 6: Important Property Characteristics if Buying

 

Calculation Notes:
  1. Number of Aspiring UK Homeowners: Source: DCLG live tables on dwelling stock Great Britain table 102 by tenure (last updated May 2018) Total UK Dwellings 27,713,000 – 17,345,000 owner-occupied dwellings = 10,368,000 non-homeowners x 74.3% non-homeowners who would like to own their home one day = 7,703,424, approximately 7.5 million aspiring homeowners
  2. Number of UK homeowners who considered a move in past 2 years but did not go through with a move: 17,345,000 homeowners households x 21.01% homeowners considered a move but did not in past 2 years=3,644,185, more than 3 million
  3. Number of homeowners age 55+ who considered a move in past 2 years but did not go through with a move: Source Legal & General & CEBR Last Time Buyer report 3.1 million downsizers/ representing 26% of homeowners age 55+ = 11.9 million Homeowners age 55+ x 19.6% homeowners 55+ who considered a move but did not = 2,332,400, more than 2 million homeowners 55+ considered a move in past 2 years but did not move.  Of these, 45.82% did not move because of lack of suitable housing: 2,332,400 x 45.82% = 1,068,706, over 1 million homeowners age 55+ wanted to move but did not because of lack of suitable housing
  4. Number of homeowners age 18-54 who considered a move in past 2 years but did not proceed: Total homeowners (17,345,000) – Homeowners 55+ (11,900,000)= 5,445,000 homeowners 18-54 x 22.78% considered a move but did not in past 2 years = 1,240,371, 1.2 million homeowners age 18-54 considered a move but did not do so.