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Official Figures Confirm Market Stagnation

February 13, 2011

According to official figures, the number of people moving house is the lowest since records began. The stagnating mortgage market, high deposits and increased stamp duty are all contributory factors. The most recent figures show that just 534,000 homeowners moved during 2009, a 45 per cent drop on the same figures for the previous year. Currently, 70 per cent of homeowners have been in their property for more than five years with the average figure being 11 years.

It’s not just the requisite deposit that has left people stumped, the increasing level of stamp duty has increased the cost for those hoping to move house. When New Labour came to power in 1997, stamp duty was 1 per cent on all homes over £60,000 meaning a house bought for £300,000 would have required £3,000 to be paid in stamp duty. Today, a house bought for £300,000 would require £9,000 to be paid in stamp duty. Similarly, a £1.5 million house would have incurred stamp duty of £15,000 in 1997 but from April onwards the stamp duty will amount to £75,000.

According to many, the biggest barrier is the high deposit combined with the requirement for an impeccable credit history. Even the Council of Mortgage Lenders has recognised the issues, declaring the mortgage market to be ‘dysfunctional’. In an effort to resolve the crisis, Grant Shapps, Housing Minister, is set to hold a summit aimed specifically at enabling first time buyers to get on the property ladder.

Data due to be published today is expected to show that the number of first time buyers is close to record lows. The number of first time buyers has plummeted to less than 200,000 per year. This figure was over triple at 600,000 ten years ago. Whilst just 30 per cent of first time buyers relied on financial help from family in 2005, this year over 80% of first time buyers could only buy with the help from parents and other family. Today, the average deposit put down by a first time buyer is £28,770, almost triple the average deposit ten years ago.

Matt Griffith from the first time buyers campaign Priced Out claims, “We now have the least accessible housing market in a generation, and it is the younger generation who are losing out. All but the wealthiest first time buyers are now effectively frozen out of the housing market, which is very worrying”

Whilst the mainstream mortgage market has failed to show growth, there has been a significant increase in one area; buy-to-let mortgages. According to the Council of Mortgage Lenders the number of buy-to-let mortgages has soared to a record 1.3million. This supports the assertion that those wealthy enough to buy-to-let can flourish but those attempting to enter the mainstream mortgage market are left out in the cold.

13th February 2011

By Richard Best and Kate Hannon

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