Weekly Round-up, 7th July 2017
Close To The Boom
The number of first-time buyers (FTBs) reached an estimated 162,704 in the first six months of 2017, only 15% below the peak of the last boom in 2006 (190,900), according to the latest Halifax First Time Buyer Review.
Although the growth in FTBs slowed to just 3%, compared to an increase of 10% last year, the number of homeowners getting on to the property ladder for the first time is up from 154,200 in the same period in 2016 and more than double the market low in the first half of 2009 (72,700).
A decade ago, just over a third (36%) of all house purchases financed by a mortgage were made by first-time buyers. In 2017, this proportion is estimated to have risen to almost half (47%), with the share growing from 44% since the launch of the Help to Buy scheme in April 2013. Whilst the homemover (current owner occupier) market has slowed, housing activity has been dependent on buyers taking the first step on the ladder.
In the first half of 2017, the average house price paid by first-time buyers was £207,693 – the highest on record. In the past year the average value of a typical first-time buyer home has grown by 4% from £199,414. And in the past five years, the average price has grown by 50% from £138,663 to £207,693 (an increase of 50% or £69,025), comfortably outperforming price growth across the entire market (42%).
Where Have All The Movers Gone?
Before the recession, there were about 1.6 million home sales a year in the UK, which plummeted to 860,000 in 2009 but has since recovered to around 1.2 million. New research published by the Council of Mortgage Lenders (CML) suggests that the shortfall is largely the result of “missing movers” – mortgaged home-owners not moving up the housing ladder.
The CML commissioned researchers Neal Hudson and Brian Green to explore the phenomenon. They suggest that “missing movers” account for about 320,000 of the annual housing transaction shortfall. They point to a number of reasons for the decline, including the fact that there are now fewer mortgaged owners, and they tend to be older and so naturally less likely to move. However, there are still around 140,000 missing moves that can be attributed to a decline in the rates of moving among mortgaged home-owners.
Three factors determine the moving rate among this groups – their desire to move, sufficient funds, and the availability of a home they want to buy. Of these three factors, the research suggests that the availability of sufficient funds – specifically, sufficient equity – is the dominant factor holding back the mortgaged mover rate. The researchers observe that, in many ways, it is not the present but the past that is extraordinary. For five decades the market underwent changes that provided an enormous boost to the ability of people to buy and to own their homes. But expecting a return to those conditions is unrealistic, they suggest.
With the summer holiday season about to start and Brits making a staggering 70 million overseas trips a year, latest analysis by the Association of British Insurers highlights why travel insurance is essential.
Analysis of claims paid last year by travel insurers reveals that £370 million, equating to £1 million every day, was paid to help 480,000 travellers and their families who needed help abroad, such as emergency medical treatment and lost baggage. This was the highest amount paid since 2010, when disruption caused by the Icelandic Ash Cloud pushed claims costs to an all-time high. The increase in claims costs was mainly due to increasing costs of emergency medical treatment with 154,000 travellers helped by insurers at a cost of £199 million. These included a £100,000 bill for treating an abscess in the USA, £16,000 for the treatment of a fractured leg in a motorcycle accident in Thailand, and £11,000 to remove a brain tumour in Spain. And finally £130 million was paid out on 159,000 claims to cancelled holidays with £17 million paid on 83,000 claims for baggage and money lost while travelling.
The cost of the average annual travel insurance policy is £37, compared to the average medical claim of £1,300, and the average cancellation claim of £816. Single trip policies can be cheaper, often less than what a family may spend on a snack or a couple of glasses of wine at the airport.
Couples face an average bill of £800 each time they attend a wedding, according to a survey on the wider costs associated with tying the knot.
The new Nationwide Current Accounts research, which polled 2,000 adults who have attended a wedding, follows an inaugural survey in 2015. It shows that the average cost per person of attending a wedding – from the stag and hen party, buying gifts and clothes, and attending the ceremony – is just over £400. This represents a modest £23 increase since the 2015 survey.
But with many guests attending multiple ceremonies, saying yes could cost them much more. The significant financial outlay is given as the reason why a quarter of people (25%) have declined a wedding invitation, while around one in six (16%) have become overdrawn or borrowed money to be able to attend.
The survey shows male wedding guests spend £21 more than female wedding guests, £411 compared to £391. However, women are catching up, having increased their overall spend by £38 since Nationwide’s 2015 survey, while men spend only £8 more.