Snakes and ladders; our housing journey

Oxford from above

First time buyers are front of the pack in the Government’s drive for home ownership, with much recent housing policy aimed at supporting their first purchase.

But once they become home owners their journey doesn’t end, even if the state support does. This week we will be looking at the journey home owners face moving on for a second, third, fourth and eventually last time and what their onward mobility means for the rest of the housing market.

The story goes that the traditional housing journey follows a fairly predictable path. After spending a long time scrimping and saving, a new buyer takes the plunge and buys a flat or a small house. After a few years pass they move in with a partner, perhaps somewhere a little bigger.

Eventually as they look to start a family, they trade up to a big family home. Skip forward a couple of decades and the children fly the nest and they move on to a small cottage. Finally, as age begins to creep up on them, they decide to move into a more manageable two bedroom bungalow on the edge of town.

In reality however, no two people ever quite make the same housing journey. With fewer jobs for life, some young people tend to move around more than they used to. On the other hand, some chose not to move, and stay living at home with their parents. The upshot is that different people lead very different lives and the typical housing journey has changed significantly over time. The housing market needs to work ever more flexibly to accommodate everyone’s choices.

The average age someone buys their first home is rising, alongside the time they stay in it. This means homeowners are moving less often than they used to, skipping a move or two over the course of their housing journey. While some of this change has been driven by shifting demographics, it has been compounded by spiralling Stamp Duty bills.

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While Stamp Duty costs have soared 172% for the average first-time buyer in real terms since 1995, for those buying a large family home it has risen 362%, making moving without trading down difficult. At the other end of the spectrum people are living longer and healthier lives, meaning the need to downsize isn’t quite so pressing.

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The current government’s drive for home ownership is rooted in the many benefits it can provide: stability, security and the greater ability to save. But increasingly these benefits have come at a price: the rising cost of moving and the low incentives to do so mean it’s
cheaper and easier for homeowners to stay put, something they have been choosing to do in growing numbers.

This matters because making it easier for people to move when they want to is a vital part of making the best use of the homes we have. If homeowners occupied their homes as efficiently as renters do, the UK could build half the number of houses it currently does to house the same number of people.

Our next feature in this weeks Snakes and ladders series looks at First-time movers, and the challenges they face as they move into the next phase of their housing journey.