|By Marketwired .||
|February 4, 2013 04:36 PM EST||
LONDON, UNITED KINGDOM -- (Marketwire) -- 02/04/13 --
This is the third Lloyds TSB Home Movers Review, tracking conditions for those who already own a home. The review is based on data from the Halifax house price database, the Council of Mortgage Lenders, the Office for National Statistics and the Bank of England.
The home mover market has remained relatively flat over the past year. However, despite seeing some slight improvements, second steppers are still bearing the brunt of the stagnant housing market, according to the latest Lloyds TSB Home Movers Review.
-- Lloyds TSB estimates that there were around 319,000 home movers in 2012, largely unchanged from 2011. -- Second steppers' current equity position would account for just 7% of the price of a typical second stepper home. Compared with almost half (42%) in 2005. -- The average home mover deposit in 2012 was GBP 61,743. This is a rise of 59% from the average of GBP 38,866 in 2002.
The Lloyds TSB second stepper housing affordability measure - calculated as the average price of a typical second stepper home(1) less their current equity position(2) as a ratio of average earnings - stands at 4.6 times gross annual full-time average earnings for 2012. This is significantly higher than a decade earlier when the ratio was 2.9 times gross annual average earnings, and well above the long-term average of 3.3.
However, second stepper affordability has improved slightly on the previous year - the Lloyds TSB measure reached its highest level, 5.4, in a quarter of a century in 2011. As more time passes since the peak of the market and the subsequent fall in house prices in 2007-8, a higher proportion of potential second steppers will have bought their first property when house prices had already fallen from their peak. Despite this, second steppers in aggregate still face considerable challenges.
Low equity levels creating a barrier for second steppers
The typical potential second stepper in 2012 would have bought their first home in 2008(3). Such a homeowner is, on average, estimated to have an equity level of just GBP 11,500(4) - equivalent to 7% of the average price for a semi-detached house (GBP 162,170). With the average cost of moving estimated at close to GBP 9,000(5), this level of equity leaves very little to put down as a deposit on the next home. In addition, there are also many potential second steppers who bought at the peak of the market in 2007. Many of these homeowners are likely to be in an even worse financial position, often with negative equity. It may also be the case that some first-time buyers who had bought before or after the market peak could also be facing problems moving along the property ladder.
This situation is in stark contrast to 2002 when second steppers had an average equity level of GBP 45,000 - equivalent to 38% of the average price for a semi at the time.
South East is the least affordable area for second steppers
The South East is the least affordable UK region for second steppers with an average affordability ratio of 6.3, followed by London (6.1). The West Midlands and East Midlands (both 4.0) are the most affordable regions for those in their first home looking to take their next step on the property ladder. (See Table 1)
Nitesh Patel, housing economist at Lloyds TSB, commented:
"Even though many of today's second steppers won't have bought at the height of the market, many are still going to struggle to make that move up the housing ladder. House prices have been falling or flat for the past four years, and as a result many are still in a very low equity position.
"The difficulties faced by aspiring second steppers are having a considerable knock- on impact for potential first-time buyers due to the resulting shortage of properties available on the market with housing chains proving hard to establish."
Additional Key findings;
Home movers, 2012
The data in the section below refers to 'home movers'; defined as all those already in the housing market (i.e. they currently own a home). Second Steppers are a subset of home movers and refer only to those looking to get on the second rung of the housing ladder.
- Lloyds TSB estimates that there were around 319,000 home movers in 2012. This represents a modest (1%) improvement on 2011. The total, however, is only just over a third of the level in 2002 (865,100). (See Table 2)
- Since the start of the housing downturn in 2007, the average price paid by a home mover has fallen by 18% from of GBP 250,005 to GBP 205,809 in 2012.
- Nationally, home mover property prices fell by 1% in the past year. Several regions - such as the North, West Midlands, East Anglia, South West and Wales - have seen a slight increase (1%-2%). (See Table 3)
Deposits and Advances
- The average deposit put down by a home mover in 2012 was GBP 61,743. This was 59% higher than the average deposit of GBP 38,866 in 2002.
- Home movers in the capital put down the largest average deposit - GBP 110,151 - 31% of the average property value. In contrast, home movers in Northern Ireland put down the smallest average deposit (GBP 32,600, or 25%).
- The average mortgage advance for a new home mover is GBP 144,067; a quarter higher than a decade ago (GBP 116,599). (See Table 4)
- The average age of a home mover is 40 years old. This is three years older than a decade ago (37 in 2002). Most of the increase in buyer age has occurred since 2007. (Source: CML)
Mortgage affordability improves for home movers
- Typical mortgage payments for a home mover (i.e. those already in the housing market) - stood at 31.5% average gross disposable earnings at the end of 2012. This has come down sharply from an all time peak of 52% in 2007. This improvement has been due to a reduction in both mortgage rates and house prices.
Offering a solution
- Addressing the challenges faced by those looking to move home, but suffering from a difficulty raising the deposit, Lloyds TSB offers the Lend a Hand Home mover mortgage.
- The Lloyds TSB Lend a Hand Home mover product allows borrowers to take out a mortgage with a deposit of just 5%, but can access a rate that is the equivalent of products available for borrowers with a much larger deposit. This is because their funds are backed up with the savings of a helper, such as a parent, grandparent or other family member. At the same time, their helper benefits from a competitive savings rate as a legal charge is taken over the savings to offset the risk.
Table 1: Second Steppers Affordability(i) by Region, 2002-2012(ii) ---------------------------------------------------------------------------- 2002-2012 Percentage 2002 2012 Points change North 2.7 4.2 1.5 Yorkshire and Humberside 2.5 4.1 1.6 South East 3.2 6.3 3.0 South West 3.3 5.7 2.4 East Anglia 2.4 4.8 2.4 Northern Ireland 2.6 5.0 2.4 Wales 2.5 4.6 2.1 Greater London 4.1 6.1 2.0 West Midlands 2.2 4.0 1.9 East Midlands 2.3 4.0 1.8 North West 2.9 4.6 1.7 Scotland 2.7 4.2 1.6 UK 2.9 4.6 1.7 ---------------------------------------------------------------------------- Sources: Lloyds TSB, CML, Halifax and ONS (i)Average price of a typical second stepper home(1) less their current equity position as a ratio of average earnings. (ii)All years refer to 12 months to November. Table 2: Number of homebuyers (purchasing with a mortgage) - UK ===================================================================== Number of Annual % Number of Annual % Home movers change FTBs change ===================================================================== 2002 865,100 16% 531,800 -6% ===================================================================== 2003 882,200 2% 369,600 -31% ===================================================================== 2004 886,700 1% 358,100 -3% ===================================================================== 2005 615,600 -31% 363,800 2% ===================================================================== 2006 712,100 16% 402,800 11% ===================================================================== 2007 653,600 -8% 359,900 -11% ===================================================================== 2008 320,600 -51% 192,300 -47% ===================================================================== 2009 315,000 -2% 196,600 2% ===================================================================== 2010 339,600 8% 198,600 1% ===================================================================== 2011 315,500 -7% 193,000 -3% ===================================================================== 2012(i) 318,667 1% 216,000 12% ===================================================================== Source: CML,(i) Lloyds TSB estimate Table 3: Home movers: Average House Price % Change, 2002-2012(ii) =========================================================================== 1 year 10 year % % 2002 GBP 2011 GBP 2012 GBP change change =========================================================================== North 97,747 146,019 147,142 0.8% 51% =========================================================================== Yorkshire and the Humber 106,936 160,342 159,854 -0.3% 49% =========================================================================== North West 116,213 165,599 158,783 -4.1% 37% =========================================================================== East Midlands 121,703 163,070 162,859 -0.1% 34% =========================================================================== West Midlands 140,546 171,632 175,323 2.2% 25% =========================================================================== East Anglia 146,661 194,287 195,920 0.8% 34% =========================================================================== Wales 108,235 154,115 156,093 1.3% 44% =========================================================================== South West 163,871 217,543 219,647 1.0% 34% =========================================================================== South East 206,245 264,871 263,910 -0.4% 28% =========================================================================== Greater London 268,026 362,222 357,170 -1.4% 33% =========================================================================== Northern Ireland 110,492 148,097 129,829 -12.3% 18% =========================================================================== Scotland 101,217 169,485 167,058 -1.4% 65% =========================================================================== UK 155,466 207,126 205,809 -0.6% 32% =========================================================================== Source: Lloyds TSB calculations, Halifax (ii)All years refer to 12 months to November Table 4: Home movers: Average Price And Deposit By Region, 2012(ii) =========================================================================== Average Deposit as % House Price Average of purchase Region (GBPs) Deposit (GBPs) price =========================================================================== North 147,142 38,345 26% =========================================================================== Yorkshire and the Humber 159,854 43,144 27% =========================================================================== North West 158,783 40,537 26% =========================================================================== East Midlands 162,859 46,513 29% =========================================================================== West Midlands 175,323 51,001 29% =========================================================================== East Anglia 195,920 62,616 32% =========================================================================== Wales 156,093 45,095 29% =========================================================================== South West 219,647 73,648 34% =========================================================================== South East 263,910 83,725 32% =========================================================================== Greater London 357,170 110,151 31% =========================================================================== Northern Ireland 129,829 32,600 25% =========================================================================== Scotland 167,058 47,311 28% =========================================================================== UK 205,809 61,743 30% =========================================================================== Source: Lloyds TSB calculations, Halifax (ii)All years refer to 12 months to November
(1) The typical second stepper home is assumed to be a semi detached home based on consumer research by Lloyds TSB which found that 60% of people expect to take their second step on the property ladder into a semi-detached home: www.lloydsbankinggroup.com/media1/press_releases/2012_press_release_brands/ltsb/2502_second.asp.
(2) Current equity position is defined as the sum of deposit, capital repayments (variable rate mortgage using average LTV for an FTB and the average mortgage rate for new business undertaken by UK banks produced by the Bank of England) and change in the average FTB house price over the period. The calculation is based on house purchasers moving 4 years after their first purchase, which is based on our market research (see below).
(3) The Second Steppers consumer research was undertaken by BDRC Continental (bdrc-continental.com) on behalf of Lloyds Banking Group. Fieldwork took place in January 2011. Around 400 interviews were collected from a representative online consumer panel (Valued Opinions). Further methodological detail is available on request. One of the findings showed that FTBs stayed in their first property on average for 4 years before moving on to their next home. www.lloydsbankinggroup.com/media1/press_releases/2012_press_release_brands/ltsb/2502_second.asp
(4) Based on calculation from the Halifax House Price database
(5) LTSB estimate in http://www.lloydsbankinggroup.com/media/pdfs/LTSB/2012/2701_Cost.pdf
THE AFFORDABILITY CALCULATION:
The housing affordability measure for second steppers is defined as the average price for a typical second stepper home adjusted for the equity position from their current home as a ratio of average earnings. The typical second stepper home as assumed to be a semi detached home. Their current equity position is defined as the sum of deposit, capital repayments (variable rate mortgage using average LTV for an FTB and the average mortgage rate for new business undertaken by UK banks produced by the Bank of England) and change in the average FTB house price over the period. The calculation is based on a single income and is, therefore, conservative.
The multiple of 3.3 is in line with the average house price to income ratio for a second stepper over the past 25 years (1987-2012). (Source: Halifax).
This research is based on data from the Halifax's housing statistics database as well as the Council of Mortgage Lenders, the Office for National Statistics and the Bank of England.
1. House Prices
The prices used in this research are simple arithmetic ('crude') averages. These prices are not standardised and therefore can be affected by changes in the sample from period to period.
2. Average Earnings
Average earnings figures are from the ONS's "Annual Survey of Hours and Earnings" (ASHE) and refer to the means for full-time employees.
At local authority level, figures for the relevant local authority (residence based) are used in the majority of cases. Where this has not been possible due to data unavailability, the relevant regional average has been used.
3. Historic figures on the number of home movers and first time buyers have been sourced from the Council of Mortgage Lenders (CML).
0845 300 0000
Countless business models have spawned from the IaaS industry. Resell Web hosting, blogs, public cloud, and on and on. With the overwhelming amount of tools available to us, it's sometimes easy to overlook that many of them are just new skins of resources we've had for a long time. In his General Session at 16th Cloud Expo, Phil Jackson, Lead Technology Evangelist at SoftLayer, broke down what we've got to work with and discuss the benefits and pitfalls to discover how we can best use them to d...
Jul. 7, 2015 10:30 PM EDT Reads: 2,461
"We have seen the evolution of WebRTC right from the starting point to what it has become today, that people are using in real applications," noted Dr. Natasha Tamaskar, Vice President and Head of Cloud and Mobile Strategy and Ecosystem at GENBAND, in this SYS-CON.tv interview at WebRTC Summit, held June 9-11, 2015, at the Javits Center in New York City.
Jul. 7, 2015 10:15 PM EDT Reads: 1,138
Enterprises are turning to the hybrid cloud to drive greater scalability and cost-effectiveness. But enterprises should beware as the definition of “policy” varies wildly. Some say it’s the ability to control the resources apps’ use or where the apps run. Others view policy as governing the permissions and delivering security. Policy is all of that and more. In his session at 16th Cloud Expo, Derek Collison, founder and CEO of Apcera, explained what policy is, he showed how policy should be arch...
Jul. 7, 2015 09:30 PM EDT Reads: 1,121
The 3rd International WebRTC Summit, to be held Nov. 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA, announces that its Call for Papers is now open. Topics include all aspects of improving IT delivery by eliminating waste through automated business models leveraging cloud technologies. WebRTC Summit is co-located with 15th International Cloud Expo, 6th International Big Data Expo, 3rd International DevOps Summit and 2nd Internet of @ThingsExpo. WebRTC (Web-based Real-Time Com...
Jul. 7, 2015 08:00 PM EDT Reads: 888
It is one thing to build single industrial IoT applications, but what will it take to build the Smart Cities and truly society-changing applications of the future? The technology won’t be the problem, it will be the number of parties that need to work together and be aligned in their motivation to succeed. In his session at @ThingsExpo, Jason Mondanaro, Director, Product Management at Metanga, discussed how you can plan to cooperate, partner, and form lasting all-star teams to change the world...
Jul. 7, 2015 07:00 PM EDT Reads: 2,621
Internet of Things (IoT) will be a hybrid ecosystem of diverse devices and sensors collaborating with operational and enterprise systems to create the next big application. In their session at @ThingsExpo, Bramh Gupta, founder and CEO of robomq.io, and Fred Yatzeck, principal architect leading product development at robomq.io, discussed how choosing the right middleware and integration strategy from the get-go will enable IoT solution developers to adapt and grow with the industry, while at th...
Jul. 7, 2015 07:00 PM EDT Reads: 2,659
SYS-CON Events announced today that Harbinger Systems will exhibit at SYS-CON's 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Harbinger Systems is a global company providing software technology services. Since 1990, Harbinger has developed a strong customer base worldwide. Its customers include software product companies ranging from hi-tech start-ups in Silicon Valley to leading product companies in the US a...
Jul. 7, 2015 05:45 PM EDT Reads: 2,506
The 4th International Internet of @ThingsExpo, co-located with the 17th International Cloud Expo - to be held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA - announces that its Call for Papers is open. The Internet of Things (IoT) is the biggest idea since the creation of the Worldwide Web more than
Jul. 7, 2015 05:00 PM EDT Reads: 2,310
The time is ripe for high speed resilient software defined storage solutions with unlimited scalability. ISS has been working with the leading open source projects and developed a commercial high performance solution that is able to grow forever without performance limitations. In his session at Cloud Expo, Alex Gorbachev, President of Intelligent Systems Services Inc., shared foundation principles of Ceph architecture, as well as the design to deliver this storage to traditional SAN storage co...
Jul. 7, 2015 05:00 PM EDT Reads: 2,498
SYS-CON Events announced today that ProfitBricks, the provider of painless cloud infrastructure, will exhibit at SYS-CON's 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. ProfitBricks is the IaaS provider that offers a painless cloud experience for all IT users, with no learning curve. ProfitBricks boasts flexible cloud servers and networking, an integrated Data Center Designer tool for visual control over the...
Jul. 7, 2015 05:00 PM EDT Reads: 2,280
"We got started as search consultants. On the services side of the business we have help organizations save time and save money when they hit issues that everyone more or less hits when their data grows," noted Otis Gospodnetić, Founder of Sematext, in this SYS-CON.tv interview at @DevOpsSummit, held June 9-11, 2015, at the Javits Center in New York City.
Jul. 7, 2015 04:45 PM EDT Reads: 1,744
"CenturyLink brings a full suite of services to the table and that enables us to be an IT service provider," explained Jeff Katzen, Director of the Cloud Practice at CenturyLink, in this SYS-CON.tv interview at 16th Cloud Expo, held June 9-11, 2015, at the Javits Center in New York City.
Jul. 7, 2015 04:15 PM EDT Reads: 812
17th Cloud Expo, taking place Nov 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterprises ar...
Jul. 7, 2015 04:00 PM EDT Reads: 1,979
One of the hottest areas in cloud right now is DRaaS and related offerings. In his session at 16th Cloud Expo, Dale Levesque, Disaster Recovery Product Manager with Windstream's Cloud and Data Center Marketing team, will discuss the benefits of the cloud model, which far outweigh the traditional approach, and how enterprises need to ensure that their needs are properly being met.
Jul. 7, 2015 03:45 PM EDT Reads: 2,423
"In the IoT space we are helping customers, mostly enterprises and industry verticals where time-to-value is critical, and we help them with the ability to do faster insights and actions using our platform so they can transform their business operations," explained Venkat Eswara, VP of Marketing at Vitria, in this SYS-CON.tv interview at @ThingsExpo, held June 9-11, 2015, at the Javits Center in New York City.
Jul. 7, 2015 03:45 PM EDT Reads: 999