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UK Homeowners Stay In Their Properties Longer Than In Past

by Jim ONeil on January 5, 2011

in Personal Finance News

The UK home is once again being viewed as a residence rather than an investment. Research shows that homeowners now remain in their properties longer than they have in the past. Compared to statistics from the start of the credit crisis, UK homeowners are spending double the length of time in their current homes before they sell and move.

In 2007, the Council of Mortgage Lenders (CML) found that people spent 11 years in their homes. Nearly three decades ago, this figure was only eight years. Now, it is up to an astounding 21.5 years. This is quite a dramatic change from the housing boom prior to the credit crisis, when many people purchased and sold properties as investments before the structures had even been built.

An unfortunate result of the declining housing prices is that many people who purchased off-plant properties and held them are facing negative equity. Falling home prices have created a situation where property values are less than mortgage values. Homeowners learned that purchasing and selling property to make money is no longer the best approach.

Melanie Bien, with mortgage broker Private Finance, commented that the short-term decline in property values has led homeowners to view their homes as long-term residences. Daily Telegraph research shows that housing transactions are at the lowest levels in nearly 30 years. Transactions totaled 1.5 million during 1981 but were a meager 900,000 during 2009.

Economists predict that housing prices may fall seven percent during 2011 due to few available mortgages. If the Bank of England increases interest rates from 0.5 percent, this will have a negative effect on the housing market. A CML spokesman concluded that with 18 million UK privately owned homes and annual transactions at 900,000 per year, it will take 20 years for each residence to be sold once.

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