Oxford Home Owners Are Only Moving Every 18 Years (Part 1)

The average house price in Oxford is 12.87 times the average annual Oxford salary. This is higher than the last peak of 2008, when the ratio was 9.61. Several City commentators anticipated that in the ambiguity that trailed the Brexit vote, UK (and hence Oxford) property prices might drop like a stone. The point is - they haven’t!

Now it’s true the market for Oxford’s swankiest and poshest properties looks a little fragile (although they are selling if they are realistically priced) and overall, Oxford property price growth has slowed, but the lower to middle Oxford property market appears to remain quite strong.

Scratch under the surface though, and a different long-term picture is emerging away from what is happening to property prices. Oxford people are moving home less often than they once did. Data from the Office of National Statistics shows that the number of properties sold in 2016 is lower than it was in the Noughties and lower than I has been over the last 8 years.

We are mirroring the post credit crunch (2008 and 2009) low levels of property sales, and the torpor of the Oxford housing market following the Brexit vote has seen the number of property sales in Oxford and the surrounding local authority area level off.  It is too early to tell if this will be a new trend.

It was the 1980’s that saw the highest levels of people moving home. Nationally, everyone was moving on average every decade. Even though it was during the Labour administration of the late 1970’s where the right to buy one’s council house started, it was the Housing Act of 1980 that that really got council tenants moving, as Margaret Thatcher’s Tory government financially encouraged council tenants to buy their council-rented homes.

Looking at the property sales figures in the Oxford area since 2010/11, what has caused the reduced activity which has been mirrored nationally? The reasons behind this are complex, but a good place to start is the growth rate of real UK household disposable income, which has fallen from 5.01% a year in 2000 to 1.68% in 2016. Also, things have deteriorated since the country voted to leave the EU as consumer price inflation has risen to 2.7% per annum, meaning inflation has eaten away at the real value of wages.

With meagre real income growth, it has become more difficult for homeowners to accumulate the savings needed to climb up the housing ladder as nationally, the level of savings has also dropped from 4.26% of household income to -1.11% (i.e. people are eating into their savings).

Next week I will be discussing how these issues have led to a slump in the number of Oxford people moving home with house owners moving just once every 18 years.