SCOTS homeowners are stuck in a property trap fuelled by rising prices and economic uncertainty, which is forcing them to stay in houses they are desperate to leave.
One in five homeowners would like to move house within the next five years, according to new research from Bank of Scotland.
However, a range of financial and social barriers mean that many are finding their route up the property ladder is either blocked or too challenging to negotiate.
In many cases Scots are instead opting to remain where they are and extend or improve their properties – adding to the problems of a stagnant market.
According to the bank’s research, one-fifth of homeowners say the struggle to find the right property within their budget is the key blocker for buying their next home.Meanwhile, one in three say they would need a significant pay rise to fund a move to a more expensive property.
The costs attached to moving was also cited as a key factor standing in the way of making the next move.
Graham Blair, mortgages director at Bank of Scotland, said: “There are a number of factors that seem to be making Scottish homeowners want to stay put, from the cost of moving, to a lack of the ‘right type’ of homes coming on to the market and we have seen more homeowners putting off the move and looking to add value to their homes instead.
“Whilst this isn’t great news for the housing market where sales have remained flat or fallen over the past few months, encouragingly some homeowners are still motivated and want to move and with little concern over recent base rate rises we may start to see more movement early next year.”
Aside from financial factors, homeowners are being put off moving by the process of house-hunting, with two-fifths saying the system discouraged them from even looking to make a move.
Around one-fifth said they were put off by the prospect of dealing with estate agents, and 15 per cent of those questioned were wary of the economic outlook.
According to the Registers of Scotland house price index, average house prices have been steadily increasing each month since March 2016.
Its latest house price index put the average price of a property in Scotland in September 2017 at £144,924 – an increase of 3.1 per cent on September in the previous year.
The volume of residential sales in Scotland in July 2017 was 8,725 – a decrease of 5.7 per cent on July 2016, and a decrease of 18.3 per cent on the previous month.
First-time buyers are among the hardest hit, with the cost of buying a flat showing the biggest increase – rising by 4.2 per cent to £105,398. The average price for a property purchased by a first-time buyer was £117,510 – an increase of 3.1 per cent compared to September 2016. According to recent research from the Council of Mortgage Lenders Scots home buyers are borrowing more, with £2.55 billion borrowed in the third quarter of 2017, up 15 per cent year on year, with first-time buyers borrowing £1.04 bn.
The Bank of Scotland research also revealed that around one-third of Scots looking to move home in the next five years want to downsize to a smaller property – a sign of an ageing population who no longer want the burden of a large family home.
Of the 46 per cent of homeowners not looking to move, half said they had plans to improve their home instead. However the survey also revealed that the majority of homeowners are not concerned by the Bank of England base rate increase announced in November, with 85 per cent saying the interest rate rise has had no effect on their desire to move home and 69 per cent agreeing that a further interest rate rise is likely next year.
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