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Why do people really move house?

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There has been an incredible amount of talk in the media about the property market over the last couple of years. As usual the reporting is incredibly negative (predicting house price crashes must be classed as light relief when you spend your day speculating about swine flu, SARs and global warming disasters).

The reporting also focuses on property prices instead of volume of transactions – the two are linked but in relation to the economy the volume is generally more important. Whilst prices are important to those getting onto the property ladder for the first time they are largely irrelevant to people buying and selling (what you lose/gain on one side you gain/lose on the other). Volume of properties sold affects a lot of people though.

The apocalyptic news blitz during 2008 effectively put the brakes on the property market – reducing the number of overall transactions from previous averages of around 1.2m – 1.4m a year to around 450,000 in 2008 – less than half (one source for this is www.houseprices.uk.net).

When the media convinces everyone that prices are plummeting they freeze like rabbits in headlights and don’t do anything (try comparing the predicted 40% price falls with the actual price falls of around 16% in 2008 and price rises in 2009).

The knock-on effect of this was massive – each house move usually involves everything from electricians, to plumbers, DIY stores, decorators and furniture shops. Halve the number of transactions and you’ll dramatically hit their businesses.

I’m not saying that the media created the recession from nothing – there were fundamental problems in the mortgage market that needed to be resolved – there needed to be an adjustment. However the media did take a ‘normal’ house price correction (of the kind we saw at the end of 2004) and turn it into a panic-driven near-collapse of the market to levels we haven’t seen in over 50 years.

So if the media caused ( sorry – substantially contributed to) the reduction in volumes, what’s going to happen next? Is this it? Are we going to remain a nation where only about half a million people move a year as opposed to the 1.2-1.4 million a year for the previous decade

I don’t think so.

The first reason for this is the constant level of transactions over the years. When you look back much further than the recent past (using The office for national statistics you can check the figures all the way back to 1961) you can see that the levels of transactions in recent years aren’t some sort of hyped-up blip brought about by greedy estate agents – they are the normal sort of levels. We haven’t dipped below a million transactions since 1974, and haven’t been as low as 450,000 since before these records began. (Just to avoid breaking up the flow I’ve copied a summary of the figures onto the bottom of this article)

My second reason for saying that we’re not going to stay at these levels lies in why people actually move house in the first place – here’s a list taken from www.articlesbase.com The article is American but the issues mentioned are pretty universal. Anyway, here’s the list of reasons why people move:-

1. Home is too small
2. Downsizing
3. Aging systems and decor
4. Purchase a new build
5. New home build wasn’t as expected
6. Change in family circumstances
7. Retirement
8. Moving closer to elderly parents
9. Seniors moving to retirement homes and nursing homes
10. Health Reasons
11. Neighbourhood changes
12. Commute to work
13. Corporate transfer
14.
Renovating and Flipping
15. Cashing out
16. Financial Stress
17. Difficult Neighbours

Can you see ‘house price changes’ on that list? Me neither. In fact if you look down the list, every factor mentioned involves real factors close to people’s hearts – changes to their day to day life as opposed to abstract worries set out by the media.

Are these factors going to go away?

Nope.

All of these life-changing things are continuing to occur within people’s lives. They will have caused many of them to move home already – but from the overall statistics there are a hell of a lot of people out there would have moved in the last couple of years but for some reason they haven’t (perhaps not helped by scare stories in the media). Their desire to move hasn’t gone away and sooner or later they will be coming back into the market.

So whilst the press and media speculation can cause problems (major ones this time) in the housing market, they can’t take away people’s desire to move house

What about the shortage of money – you can’t get a mortgage these days can you?

Well if you don’t bother looking for one then no you can’t. However 30 seconds on google will throw up a load of deals. The best (i.e. cheapest) deals are available to those who can put down 25%- 35%, but as an example I’ve just seen HSBC bank offering a 4.99% tracker mortgage with no arrangement fee and they will lend up to 90% of the purchase price.

Some people will say 4.99% is high but 18 months ago a rate like that would have been seen as dirt cheap by the whole market. So don’t believe the hype and actually find out yourself what you can get. You can try the search engines or an IFA (Independent Financial Adviser). I’ve had good results through one called Town and Country mortgages

Finally – so what? – I don’t work in the property industry – this is nothing to do with me

Actually it probably has. If you put half a million property transactions back into the market, the knock-on effect on all the peripheral services (I’ve listed them above – electricians, plumbers, DIY etc) is massive, and will help us to start to pull out of recession more quickly – which should be good for most people.

All we have to do then is to stop reading the papers….

Statistics – number of property transactions in millions in England and Wales – 1961 – 2002
(Source: Inland Revenue)

Year

transactions in millions

1961

0.90

1962

0.86

1963

0.94

1964

1.04

1965

0.96

1966

0.92

1967

0.98

1968

1.05

1969

1.01

1970

1.10

1971

1.20

1972

1.34

1973

1.24

1974

0.97

1975

1.17

1976

1.19

1977

1.24

1978

1.37

1979

1.31

1980

1.27

1981

1.35

1982

1.54

1983

1.67

1984

1.76

1985

1.74

1986

1.80

1987

1.94

1988

2.15

1989

1.58

1990

1.40

1991

1.31

1992

1.14

1993

1.20

1994

1.27

1995

1.14

1996

1.24

1997

1.44

1998

1.35

1999

1.47

2000

1.43

2001

1.46

2002

1.59

3 Responses to “Why do people really move house?”

  1. george says:

    house prices went down for the last four months but we have never been so busy in removals.

  2. Good article, its about time someone reminded people that mortgages are still available, you just have to look harder!

  3. […] I previously blogged about the level of property transactions historically being higher (and therefore will return to those levels once the banks release their […]

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