Thursday, Aug 03, 2017


Economist: A little-noticed change in Britain’s housing market spells trouble for everybody

The market for London’s fanciest properties looks weak and overall price growth has slowed, but Britain’s housing market hardly appears to be in freefall. Poke beneath the surface, however, and it looks as if trouble is brewing. Britons are buying and selling houses less frequently than they once did. Official data suggest that the rate of residential transactions this year is set to be the lowest since 2013. The number of sales in parts of London is approaching an all-time low as home-buyers become more cautious about their personal finances.

Posted by jack c @ 02:56 PM (7011 views) Add Comment


1. libertas said...

Are the low sales volumes due to more people joining the housing market from abroad (not selling when they buy), plus more BTL (who can't sell or else they pay capital gains tax), resulting in low inventories and future hyperinflation and volatility?

Yes, the high end has been monkey hammered by higher taxes, but that could be a temporary thing. Govt may be planning to scrap that after Brexit.

Friday, August 4, 2017 12:22AM Report Comment

2. nickb said...

has it occurred to you that sellers might simply withdraw from the market if they are unlikely to obtain the price of their dreams? It's called "Mexican standoff". Prices will fall when buyers are on the "short side of the market" (more sellers than buyers at the current prices for a sustained period). Few people are willing and able to buy at these prices. But few people are willing to sell for less. If and when enough sellers have to sell for there to be a glut, prices will fall, hopefully not long now, plus then I imagine there will also be panic selling as expectations adjust downwards.

Friday, August 4, 2017 01:57AM Report Comment

3. techieman said...

If one seller has to sell he will hit whatever bids are available . That is what is meant by prices (of all houses) are determined at the margins.

"As all of us were taught, but most of us have long since forgotten, economic change occurs at the margin, where the action takes place... individuals who can think on the margin always have an advantage over those who cannot."

Supply and demand at the margin in the real estate market consists of those who have "For Sale" signs on the lawn and those who are actively looking to buy. The price of the entire market is in their hands, not in the hands of those who are confidently sitting tight. "

This is equally applicable to both a buyers and sellers market including those that have gone too far in either direction.

Friday, August 4, 2017 02:25PM Report Comment

4. techieman said...

Are the low sales volumes due to more people joining the housing market from abroad ? Eh ???

Those from overseas are buyers but the sales numbers are low because of it ? Who are they buying from ? If someone buys something doesn't that add to a sales figure ? If someone buys from a seller then won't that seller buy from another seller (all being equal ?).Isn't that like saying first time buyers don't cause sales because they have nothing to sell ?? Surreal / obtuse or perhaps it's me ?

They can't (afford to) sell because they will pay CGT ? More likely they can't afford not to sell because of s24!

Friday, August 4, 2017 02:44PM Report Comment

5. stillthinking said...

During a period of high unemployment you wouldn't expect people to aggressively seek other jobs, so why would you expect a large number of housing transactions during a housing shortage.

Saturday, August 5, 2017 08:51AM Report Comment

6. icarus said...

@5 - the point is that transactions go up and down during the same housing shortage, so there are periods of relatively high and of relatively low transactions. In the latter case measures of house prices (at the margin) are less reliable and are more subject to britishblue's point that it's the more desirable houses within a category that actually sell - so you can knock a few K off official house price indices.

Saturday, August 5, 2017 12:35PM Report Comment

7. nickb said...

Techie @3,
Yes, but this is entirely consistent... the more people are sitting tight the fewer of those for sale signs are up... buyers are on the short side when they are being outnumbered by those signs, roughly speaking.

Sunday, August 6, 2017 01:41PM Report Comment

8. mombers said...

Stamp duty is one of the most damaging taxes. Australian Capital Territories is doing away with it and raising the same revenue via... a land tax. Watch this space. Labour mobility set to rise and over consumption of housing set to fall. I would have to fork out the best part of £20k just to move to a house that cost the same as my flat. Would need an ENORMOUS pay rise to justify moving

Monday, August 7, 2017 12:38PM Report Comment

9. sneaker said...

Why is it that much commentary comes from a position that an unaffordable property market where everyone moves all the time is the only sensible choice? How about growing old where you grew up, alongside people you know?

Monday, August 7, 2017 01:41PM Report Comment

10. mombers said...

@9 not very realistic for many people I'm afraid. It's highly unlikely that the best job and amenities for your skills and preferences are where you grow up. I'm ten thousand miles from where I grew up because I prefer urban living as a non driver and the work here is a lot better suited to my skills. Big disadvantage is being away from family though, especially with kids. A good number of my friends from South Africa returned there from London when they had kids. Having family and - ahem - staff - was more important

Tuesday, August 8, 2017 10:50AM Report Comment

11. libertas said...

What happened after 2013's previous low in transactions?

Prices rose, driving higher transactions.

Tuesday, August 8, 2017 09:50PM Report Comment

12. libertas said...

Mombers, capital gains tax is worse. Landlords will never sell a rental property into the open market because even a hovel with low rent yield is likely better than paying huge capital gains tax, particularly if the property was purchased more than ten years ago. We must get rid of or slash capital gains tax on residential properties to encourage more sales.

Tuesday, August 8, 2017 09:52PM Report Comment

13. cornishman said...

libertas said...

"What happened after 2013's previous low in transactions?"

Help to buy.

Tuesday, August 8, 2017 11:02PM Report Comment

14. jack c said...

Add another prop................

"You can use a Lifetime ISA (Individual Savings Account) to buy your first home or save for later life. You must be 18 or over but under 40 to open a Lifetime ISA. You can put in up to £4,000 each year, until you’re 50. The government will add a 25% bonus to your savings, up to a maximum of £1,000 per year"

Full details at

Wednesday, August 9, 2017 10:19AM Report Comment

15. icarus said... addition to funding for lending.

Wednesday, August 9, 2017 10:26AM Report Comment

16. taffee said...

The latest prop suggested in the papers and other media seems to be that stamp duty is stagnating the property market and
needs to be abolished!

never say never

Thursday, August 10, 2017 11:28AM Report Comment

17. mombers said...

@libby capital gains tax is a terrible idea as well as you can avoid it in a similar way by not selling. Perhaps marginally better as would only be payable by those who have enjoyed free capital gains, but still not good. The only behaviour neutral way to raise taxes on property is an annual land tax. Stamp Duty or capital gains = fewer transactions and avoidance industry. annual tax on buildings = discourages effective use of land and building activity. At the margin many people would balk at a lifetime annual liability for building an extension. And land speculators can pay nothing for decades, waiting for the price of the empty land go up. It's becoming less of a political impossibility. See ACT in Australia where they abolished stamp duty and replaced in a revenue neutral way with land tax. Abolishing stamp duty would increase prices but the land tax neutralises this so people end up with the same size mortgage but the stamp duty effectively amortised.

Thursday, August 10, 2017 12:59PM Report Comment

18. nickb said...

Hear hear. Oz is a very interesting example and a good case to show those who argue it can't be done. Would be even more interesting if they were to substitute income tax with an increased land value tax.

Thursday, August 10, 2017 11:00PM Report Comment

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