First-time buyers are increasingly becoming trapped in their first-time homes and unable to move on to homes that better suit their needs.
That at least is the implication of some figures that caught my eye recently when I was looking though some data produced by the Council of Mortgage Lenders.
Consider this: the median income of a household taking out a mortgage to move is £47,328, or it was in August this year. In 2000 that figure would have been £29,000. This represents a 60% increase in the median earnings of home movers against a 33% increase in median earnings across the UK as a whole.


Graph 1 shows the rise in the median household income of first-time buyers taking out mortgages and of house movers along with the median and mean incomes across the UK as a whole.
Graph 2 shows the ratio of the median household income of both first-time buyers and house movers to the UK median income.
It would seem that the threshold of earnings to be able to move is rising. This in turn strongly suggests that the proportion of first-time buyers able to trade up is diminishing - and probably diminishing fast.
And these figures do not take account of the fact that cash buyers have become an increasingly large part of the home-mover market.
If the figures mean what I strongly suspect they do then current policy appears to be giving large numbers of desperate first-time homebuyers a leg up into a housing trap.
What is more, as the graphs suggest, this is a problem that seems to predate the credit crunch, so is not simply about access to finance.
Continue reading "The stagnant housing market: More a problem of first-time movers than first-time buyers" »