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Have you noticed that people aren’t really moving house at the moment?
All told, the situation is going to be a thorn in the side of Labour’s housebuilding drive, which, so far, has focused on supply without acknowledging that demand is being restricted by both the cost of homes and borrowing.
Friends on both sides of housing deals tell me that they’re struggling to buy as much as they’re struggling to sell.
This state of housing market stasis is confirmed by HMRC’s data on UK residential transactions, which records the number of house sales which actually go through. In April this year, transactions were 28 per cent lower than they were in April 2024.
Now, the latter data point should come as no surprise. On 31 March, a stamp duty cut – announced by the Conservative Government in September 2022 – ended.
The real story here is that even with this artificial, politically-induced spike in activity, the number of homes that sold in March – estimated to be 310,000 – is still lower than the quarterly average of 365,000 that was recorded in the years leading up to the 2008 financial crisis.
The UK housing market is not crashing and, despite multiple warnings during the turbulence that surrounded Liz Truss’s “mini-Budget” or the rate hikes that followed, has not collapsed.
Interest rates are lower now than they were then. Last week, the Bank of England decided to hold the base rate at 4.25 per cent, but in May last year it was still soaring at 5.25 per cent relative to the heady days of near-zero rates, which fuelled the pre-pandemic housing boom.
I want to sell my own home
I know this from personal experience. I want to sell my one-bedroom starter home and upsize to a three-bedroom property where I could have a family. But even with a reasonably substantial deposit (built up by paying off the capital of my mortgage over the past nine years) and a salary that is far above average, there is very little that I can afford in London or the South East, where I am from.
The Government wants to build 1.5 million new homes, including social housing, over five years. Builders of the homes for private sale need to be confident that they can make a profit when they sell the houses they build.
square HOUSING MappedThe areas of the UK where it's hardest to climb the housing ladder, mapped
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Neal Hudson, an expert in Britain’s housing market, warns that everyone – both the Government and the rest of us who need to buy and sell housing – are caught between a rock and a hard place.
“So, we will likely see a continuation of a stagnant housing market that has implications for the second-hand market and the new build market.”
Hudson explains that “there has simply not been the movement on house prices that we would have needed in order to get the market going.
It’s for this reason, Hudson notes, that builders are crying out for the Government to stimulate demand by introducing something like former Tory chancellor George Osborne’s Help to Buy scheme – which ended in 2023 – to prop up house prices while also supporting buyers.
The brutal reality, though, is that builders will not want to sell homes more cheaply, and existing homeowners are reluctant to sell at a loss. House prices are unlikely to fall dramatically. As long as this remains the case against a backdrop of relatively expensive borrowing, the stall will continue.
This is particularly true as the amount of money announced for building affordable housing in the spending review is backloaded to come through in the 2030s and, by then, its value will likely have been eroded by inflation.
Britain relies on house prices going up to keep its housing market moving. This is because higher house prices mean movers have equity to play with when upsizing. But while house prices remain so high in relation to incomes, it will be difficult for people to borrow enough to pay them.
If Labour are serious about boosting homeownership, as they say they are, then they need to make sure people can buy, sell and move.
Right now, they haven’t seriously committed to either so that figure of 1.5 million homes is looking difficult to achieve.
vicky.spratt@inews.co.uk
Key housing
Brook House in Acton is being billed as providing a “lifeline” to women and survivors of domestic abuse who often struggle to find housing.
There’s no doubt that this sort of housing is vital and necessary. It’s a localised example of something that’s needed urgently across the country.
Vicky’s pick
I can confirm that I saw nothing of the sort. I have, however, enjoyed reading Greek Lessons – a novel from Korean author Han Kang that centres around characters studying Ancient Greece in Seoul.
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