Focusing on the real costs of moving home
Gary Salter is head of corporate accounts at Nationwide Group Intermediary Sales
A year ago, I wrote about how the recession has had a negative impact on people’s propensity to move home. At the time, researchers from YouGov had asked consumers what they thought were the main barriers to moving home. There were generalised worries, centred about the wider economic situation and also the specific costs of purchasing a home. Yet top of the list was not the level of stamp duty – particularly surprising since at the time the stamp duty holiday had just come to an end – but instead anticipated solicitors’ costs and the instability of house prices, which was rather more unexpected.
If the same questions were to be asked now, I suspect that there may have been a shift in those preoccupations since then. When respondents commented then on unstable house prices, it is likely they were referring to the fact that house prices were falling in many regions and, with house-building at low levels, the limitations in the number of new-build options on the market.
Much has changed in the year since those consumers listed their preoccupations. Whilst the state of the economy and, more particularly, the cost of living and the cost of moving remain central issues, the popularity of a number of schemes to help buyers including the Help to Buy equity loan scheme and NewBuy, as well as other measures such as Nationwide’s own scheme to help home movers called Save to Buy, has definitely boosted interest in home ownership. An extended period of low interest rates and a pick up in the number of new homes being built has also brought a fresh impetus to those looking to move home.
At the time of the original survey, I was not surprised to see that concerns about fluctuating house prices were cited as a major barrier to home purchase. Then the sentiment was very much negative, with the knock-on effects of the crash of the housing marketing in most areas still very fresh and, for many, the very real problems of negative equity or reduced levels of capital to deal with. Whatever the reality, the psychological boost of seeing house prices starting to rise and the stimulus created by the various schemes and the low interest rate mortgage deals has certainly made greater numbers feel more positive about the prospect of a home move.
As I pointed out at the time, in reality, as the Nationwide House Price Index proved, while prices did and do fluctuate they have been doing so for the last few years within a very narrow margin. Similarly, while there is evidence that in the majority of areas the direction of house prices may be upwards, with the exception of London so far prices are still relatively stable. This in turn promotes a sense of security for those buyers ready to enter the market or move onwards that now is a good time to buy. I do think though that buyers should be encouraged to fully weigh up the costs. As was seen from the example of the cost of solicitors versus the actual much bigger costs of stamp duty or agents, it’s important to make sure buyers assess and understand the whole deal, from mortgage fees to discounts on legal fees to cashbacks, before weighing up how much it will cost.
It’s as valid now as it was a year ago that our role as educators should not be underestimated. The context for today’s homebuyers certainly appears positive, with the return of competitively priced deals, lower fees, an increased focus on customer service and base rates unchanged since March 2009. As a result, fixed rate deals and portable mortgages remain popular, as consumers seek to future-proof their outgoings, and this should be encouraged as a means of insuring against arrears.
My conclusion than was that “as an industry perhaps we should be encouraging a shift in mindset – to refocus the market back to buying a property with a long term view, primarily as a home, with any increase in value as the secondary aim”.
Even with all the focus on an uptick in housing activity and rising home values, the sentiment is just as true now.