Britain’s housing market is in a slump. More and more people trying to sell are finding that nobody is willing to pay what they’re asking for their homes.
Some find that their shared ownership flats look like bad value to buyers. Others don’t want to take a hit on what they paid when prices were climbing more quickly. And the slow progress on leasehold reform has left other sellers in limbo.
So, who’s responsible for Britain’s unsellable homes? Housing reporter Pete Apps, policy expert Rose Grayston and housing guru Charlie Lamdin give their perspectives.
I keep getting asked why the UK housing market is so slow. House prices are the problem.
Not mortgage rates, not the war in Iran, not this idea that we simply have not built enough houses. The prices are too high for the people who need to move. Until we are honest about that, everything else is just rearranging the furniture.
But how did we end up here? Two schemes which were meant to help people with smaller deposits buy homes are important. Help to Buy and shared ownership schemes have clogged up the system by artificially inflating house prices and then pinning owners into homes from which they simply can’t move on.
These schemes were meant to make homes more affordable. Help to Buy – launched in England in 2013 – was originally a mortgage guarantee. Savers could buy a new-build house with a 5 per cent deposit, the other 5 per cent covered by the government, and pay no interest for five years.
Shared ownership, meanwhile, gives buyers with smaller deposits the opportunity to buy part of a home and pay rent on the rest, gradually “staircasing” their share until they own the whole place. They’ve become more popular too. In 2019-20, there were 161,000 shared ownership households; in 2024-25, there were 252,000.
There was one big problem though. You cannot make homes more affordable by giving people more money to spend on them. Put extra borrowing, equity loans or guaranteed deposits into buyers’ hands and the extra money just gets added on to the asking price. Sellers and developers capture it. The first-time buyer is still stretching, just for a higher number than yesterday.
Help to Buy inflated prices and trapped people. If your home is worth less than the mortgage you owe, you cannot sell without finding the money to cover the shortfall. Rising prices used to mask this problem, but since 2022 some Help to Buy owners have been left in negative equity, unable to move without finding tens of thousands of pounds to cover the difference. Lenders then stretched the market again by offering mortgages based on higher multiples and 40-year terms.
Shared ownership is different. It only really works financially when prices are climbing hard, which they no longer are. You pay a mortgage on a share and rent on the rest, plus service charges, repairs and everything else, and in a flat market you can be stuck in that for a very long time. That is not a solution to affordability, and never really was.
What it did do is give a tenant sick of no-fault evictions a way to buy a home they would not be moved on from. But even that lone advantage is much weaker now, because no-fault evictions died in May. So, we are left with a financial product designed for rising markets we no longer have, and new buyers are now aware of the potential dangers, meaning shared owners can find themselves stuck – and all the while they pay ever-climbing service charges on the chunk of the property they rent, making it even harder to save for their next move.
Neither of these problems was unforeseen. In 2013 the International Monetary Fund warned that Help to Buy would inflate prices, and a 2024 study found that that was exactly what happened.
“While [Help to Buy] did not help would-be-buyers in already unaffordable areas,” the authors wrote, “it boosted the financial performance of developers participating in the scheme.” Help to Buy equity scheme applications closed in 2022, but the damage was done. The market has flatlined, yet nobody wants to start knocking down prices.
Which brings me back to where we started. Sellers are coming to market asking for the kinds of prices that belong to a fantasy of where the market was in 2022. Estate agents still win instructions by overvaluing. You tell a seller their house is worth more than a buyer will pay, you get the listing, the house sits there, and then six weeks later everyone is surprised when nothing happens.
Stamp duty does much additional damage, because it is a tax on moving. And over all of that we publish a national average house price which comforts people already on the ladder.
If the Government wants a faster market, three things need to happen: it needs to stop pretending national averages are real prices; it needs to stop taxing people for moving; and it needs to stop feeding buyers money that lands in the seller’s pocket.
More red tape and another cheap-credit scheme are how you make a slow market slower, and housing more expensive than ever.
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