Desire to hold on to empty homes pushes up the vacancy rate

The rise in the owner-occupier (OO) vacancy rate following the financial crisis indicates significant numbers of people have been holding onto empty homes rather than trying to sell them. But that also implies there are plenty of homes waiting in the wings that can be put up for sale once returns on alternative assets start to improve. That additional supply will weigh on house price gains beyond this year, supporting our view that house prices will increase by just 2% y/y in 2016 and 2017.