Housing sales in UK set to jump by a fifth by 2020
The number of property transactions in the UK could rise by over a fifth in five years to reach almost 1.5 million in 2020, according to new research.
This will happen if first time buyers are given greater access to high loan to value lending, says the study commissioned by mover conveyancing services My Home Move.
The increase in annual property transaction figures from the 1.23 million recorded in 2015 to the projected 1.49 million in 2020, a rise of 21.1%, is based on an econometric forecast of property transaction volumes. This includes a 6.6% rise in property sales in 2016, compared to 2015.
The independent research uses a forecast model that draws on the historic relationship between property transactions and three variables that have had the greatest impact on property turnover: average mortgage rates, unemployment figures and the average first time buyer percentage deposit.
The forecast of transaction levels is based on the OBR prediction for unemployment which is expected to fall slightly to 5.0% this year before rising slightly to 5.3% by 2020 and the OBR prediction for Bank Rate which is expected to rise gradually from early 2018 to reach 1.0% by the end of 2020.
As part of the research, the average percentage deposit for first time buyers has been independently forecasted. This has been modelled to fall from the current 17.1% to 10% by late 2019 as more high LTV mortgage products come onto the market helping to make homeownership more affordable.
As property transactions provide one of the most important measures of the overall health of the UK’s housing market, the research highlights a positive future for the market as transactions are set to advance strongly.
‘Although house prices have improved since the economic crash, property transaction levels, which are a key indicator of market health, are yet to return to their peak of 2007,’ said Doug Crawford, chief executive officer of My Home Move.
‘This report highlights the critical importance of unlocking access to high loan to value mortgage products for first time buyers, if we are to see transaction volumes grow and the health of the market remain,’ he explained.
‘The forecast shows that the number of home purchases could see a dramatic improvement if access to home ownership for first time buyers is nurtured. In particular, we need more lending to those with smaller deposits so that average deposit sizes for first time buyers fall to 10%,’ he pointed out.
‘However, reaching this would require a coordinated effort from across the industry sooner rather than later from house builders to ensure the supply is there, from lenders to provide the high loan to value lending that first time buyers depend on, and from those of us who support first time buyers with their purchase to ensure that buying a home is as easy as it can be,’ he added.
‘It couldn’t be clearer how important first time buyers are in ensuring a healthy future for the property market as a whole,’ he concluded.