Transcription
For decades, buying a home in the UK was seen as the safest way to build wealth. But what if that is no longer true? Because right now, buying a home can become something that makes you poorer, not richer. Now, those aren't isolated cases, and they are becoming, and I'm seeing them become more and more common.
Take a look at this. This was bought for £930,000 in 2014, sold for £850,000 in 2025. This was bought for £470,000 in 2014 and sold for £405,000 last year. This was bought for a million pounds in 2006 and sold for £890,000 last year. Now, yes, some of these are London, but this isn't just a London problem anymore.
Let's look at Manchester. This was bought for £297,000 in 2022 and it sold for £295,000 last year. This was bought for £221,000 in 2014 and sold for £141,000 last year. This was bought for £280,000 in 2020 and sold for £215,000 last year.
So, of course, situations of people selling for less than they paid is not common. But the issue is something that is happening more and more, especially with apartments. But when you then consider stamp duty and buying costs, more people are losing out from property. When you then consider maintenance costs, even more people are losing from property. So property isn't just building wealth in the same way it used to universally.
And so it's no wonder that scrapping stamp duty is becoming a hotter and hotter topic because if it were scrapped or reduced, that [sighs] would fuel the property market without doubt because anything that adds liquidity to the market, especially something that reduces the upfront cost of buying, like a deposit, stamp duty. Um, all of that lubes up the property market because right now there are more homes on the market than there have been at any point over the last decade. Buyers have more choice than ever, but the issue often isn't choice. It is affordability. That's why it's never felt so hard to actually move. And buyers are chasing more and more choice. And more homeowners are quietly realizing something frustratingly uncomfortable. They might not be able to afford to move at all because the UK housing market may have entered a doom loop type scenario.
Now, that might sound dramatic. I'm not trying to be dramatic, but this isn't me saying the market will crash. It's not about prices suddenly falling 20%. It's actually something slower and potentially more dangerous. A system where people can't afford to move, more and more people can't afford to move, where sellers won't accept lower prices and where buyers can't stretch further, and every part of the market starts feeding into the next. And that's where you start to get this loop. And once it starts, it's very hard to break out of it, to stop it.
Because the reality is the market doesn't make sense because on paper, the housing market should be working. There are more homes listed on the market, more choice for buyers, supply has increased significantly. In a normal market, that should mean more transactions because there's more choice, more movement because there's more choice, and a healthier system. We've all been crying out for more property and we have it. But that's not what we're seeing.
Instead, what we're seeing is in central London, of 6,040 properties on the market, only 861 are listed as sold to contract. So just 14% of properties marketed are sold. In Manchester, of 11,254 properties on the market, only 4,068 are sold subject to contract. A far healthier 41% have sold, but still just 41%. In Bristol, of over 7,000 properties on the market, 4,000 sold. Again, a far healthier 57% of properties have sold, but still only 57%. So, clearly London is suffering. But even a market like Manchester or Bristol are still struggling. More people are trying to sell than are trying to buy. And the real problem is affordability, not choice.
Because the key thing that has changed over the last few years is not demand, it's not supply, although that's grown. It's predominantly buying power. A few years ago, someone earning £60,000 might have been able to borrow £350,000, maybe even £400,000 at low interest rates. The monthly payments with low interest rates would have worked. But today, that same person might only be able to borrow £250,000, maybe £280,000. And that completely changes the market because it doesn't matter how many homes are available to buy. If buyers simply can't afford them, they sit there.
And this is where things start to break a bit because sellers haven't adjusted as quickly as affordability has fallen. And that creates a gap. A gap between what sellers want to sell for and what buyers can actually pay. Most people I'm seeing that are having to sell less than they paid are either people that bought flats with Help to Buy where the market for flats has just collapsed on itself, or people that bought property during the super low interest rates over COVID or just before COVID that are now having to sell in a higher interest rate environment.
And there lies the hidden trap because let's say you bought a property for £300,000. A few years later you're thinking of moving. On paper, great. Maybe it's worth £310,000. Maybe it's worth £320,000. You've made money. But have you? Because when you actually move, you don't just sell. You have to then buy again. And that's where the costs stack up because you've got stamp duty, estate agency fees, legal costs, mortgage costs, moving costs, and then add to that the inflation that would have happened over that time of ownership. When you factor everything in, you might need to sell for £350,000 just to stand still, but the market only supports a sale price of £300,000 or £310,000.
So, what do most people do instead? They simply don't move. And this is the moment where the system starts to change because it isn't just about one person. This is happening across the entire market. And that is when the doom loop begins. When people can't afford to move, they stay put. Or if they do list, they don't reduce their price because reducing means accepting a loss, moving backwards financially. So instead, you just wait.
And this creates a really strange situation because now you've got more homes on the market than in over a decade, but many of them priced above what buyers can actually afford. So buyers don't buy, can't buy, which leads to the volume of properties on the market bloating. As we've seen price house price growth slowing or being pushed downwards in worse hit areas like London or for certain property types like flats that have been suffering. And as a result, confidence starts to drop. Buyers become cautious. They start thinking, if things are slowing down, maybe I should just wait, which reduces demand even further. At the same time, sellers see fewer offers, but instead of dropping price, they hold firm because they don't need to sell or they simply can't afford to. And at the same time, those that need to sell then do drop their price. And so you get this frustrating loop feeding in itself. Fewer buyers, fewer sales, more uncertainty, more hesitation. And round and round we go in this loop.
And this isn't creating a crash. It's creating more of a freeze in the property market. And that is the key point because when people talk about the housing market, we're always focused on one thing. How are house prices moving? Are they going up? Are they going down? But that's not actually the most important thing. The real engine of the housing market is transactions relative to the supply. Of all the people trying to sell, how many of them are selling? It's all about movement and liquidity. And right now, that is the part of the property market that's breaking because a housing market doesn't need prices to fall to feel broken. It just needs fewer people able to move. And that's exactly what we're seeing, less people buying relative to the volume of people selling.
But more importantly, what I'm seeing is the market is splitting in two because not everyone is affected equally in all this. The market is splitting into two halves. On one side, you have cash buyers that make up a third of transactions that include, you know, investors as well, higher income households. They're still moving. They're less sensitive to mortgage rates. They can negotiate harder because they're in a better buying position. And in many cases, they're benefiting from this environment because essentially the environment is a buyer's market in a lot of areas, in most areas.
On the other side, first-time buyers, mortgage dependent buyers, middle income households, they're predominantly the people that are stuck, completely dependent on borrowing, which has become significantly more expensive over the last three, four years. And when the majority of the market relies on mortgages, that creates a structural problem. Because it's not just fewer buyers, it's fewer capable buyers.
So, let me explain why this matters more than I think a lot of people realize. Because housing isn't just about owning a home. It is an interlinked system. There's a reason why they call it a property chain. And when movement slows down, everything starts to back up. If first-time buyers can't get on the ladder, that means existing homeowners can't move up the ladder, which means downsizers don't release stock because they can't sell, which means chains become more fragile and more likely to not come together or to collapse when they do. And the entire system slows down, not because people don't want to move, but because fewer people can relative to the supply.
So, what happens next? Where does this go from here? Because loops like this frustratingly don't fix themselves. They are really only a few ways to resolve this in my view, and comment what you think on these on these thoughts. Option one, interest rates fall significantly, which increases borrowing power, which how likely is that to really happen? It would bring buyers back into the market. It would boost the market. Option two, wages rise and over time affordability catches up, but again, how likely is that to happen, especially with AI? Or option three, prices adjust to match what buyers can actually afford. Prices drop, prices crash, which again, is that what we want? But until one of those things happens, this loop will continue. It will continue slowly, quietly in the background.
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