Why Houses Aren’t Selling (Even Without a Crash)?

Transcript

Hi, I’m Ruban Selvanayagam from Property Solvers.

For some years now, a consistent narrative has followed the UK housing market: it feels slow. 

Sellers report longer marketing periods, buyers describe caution and estate agents talk about heavier pipelines and tougher negotiations. 

What is notable is that this sentiment has persisted without turning into a national collapse in prices or transactions.

If the market were genuinely in crisis, we would expect to see transaction volumes dropping majorly, forced sales increasing and – in turn – prices falling sharply across most regions. 

Instead, what the data shows is a market operating at a lower velocity but still remaining fundamentally functional. This suggests we are not experiencing a temporary slump but rather a structural recalibration that has been developing since late 2022.

In this video, I’ll look beyond the latest headlines and track the key data from the 2022 rate reset through to the early 2026 figures.  I’ll then break down how this shift began, what’s driving it, and whether this more challenging market is simply the reality for the foreseeable future. 

Let’s get into it…

In late 2022, following the spike in mortgage rates after the mini-Budget, average two-year fixed rates moved from around 2% earlier in the year to above 6% by October. 

HMRC data shows monthly transactions falling from just under 100,000 in mid-2022 to the mid-60,000s by early 2023 – a drop of roughly 30%.

In 2023, total UK residential transactions came in at just over one million, down around 19% on 2022 and more than 30% below the pandemic peak in 2021. However, prices did not collapse; Nationwide reported modest annual falls of roughly 1 to 2%, indicating correction rather than systemic distress.

In 2024, activity stabilised. Transaction volumes recovered modestly toward 1.1 million, mortgage approvals improved from early-2023 lows, and price growth returned to low single digits. 

Through 2025, volumes remained broadly functional but below the ultra-low rate years, while marketing periods stayed longer than during the stimulus-driven era.

Now, early 2026 data confirms that this wasn’t a temporary dip.

For the latest real-time market context, I’ve drawn on Chris Watkin’s Week 7 market analysis, which in turn references data aggregated from TwentyEA and highlighted in Adam Lawrence’s Propenomix newsletter – both excellent sources of information that I’ll link to in the show notes.

According to that Week 7 update, in February there were around 663,000 homes on the market – one of the highest February stock levels in over a decade and slightly above the same point last year. Year-to-date listings sit at roughly 243,000 properties, around 1% ahead of 2025 so far, 10% ahead of 2024 and approximately 20% above the 2017–2019 average.

That suggests supply remains elevated compared with recent norms rather than reflecting a one-week anomaly.

At the same time, gross sales agreed year to date stand at approximately 167,000, which is 12% higher than 2024 and only modestly below 2025. Net sales are running at around 129,000, comfortably ahead of 2024 and materially stronger than 2023.

Taken together, the data from 2022 through early 2026 shows a market that slowed sharply, adjusted, stabilised and is now operating at a lower but functional level.

To understand why houses aren’t selling at the levels many became accustomed to in the 2010s and pandemic period, you have to begin with inventory. 

Through much of 2018 and 2019, the number of homes on the market nationally typically sat somewhere between roughly 480,000 and 550,000 at any one time. 

During 2020 and 2021, the stamp duty holiday pulled forward demand and accelerated transactions. As stock was absorbed faster than it was replenished, available listings tightened – in some periods falling into the low 400,000s. That created genuine scarcity.

Fast forward to early 2026, and we are operating around 650,000 to 660,000 homes available nationally – roughly 25–30% above pre-pandemic norms.

That increase represents well over 100,000 additional homes competing for buyers compared with the late 2010s baseline. 

When inventory expands to that extent, the appearance of a buyers market almost becomes inevitable. Scarcity drives urgency; abundance reduces it. 

In tighter property markets, buyers move quickly because delay carries risk – someone else may nab the property, estate agents are almost spoilt for choice when it comes to prospective bidders, sealed bidding becomes commonplace and auctioneers report unprecedented results.

In a higher-stock environment, the psychological pressure dissipates. Buyers know alternatives exist. They can compare properties more thoroughly, negotiate more assertively and, crucially, walk away without fearing they will be locked out of similar options. 

That shift in leverage alone lengthens decision cycles, even if underlying demand remains intact.

Instead of distress, the market response has been to act more cautiously. Buyers reassess budgets and transactions still occur – just at a slower rhythm – as expectations adjust in order to get deals over the line.

At the same time, many sellers remain psychologically anchored to the peak-era conditions of 2020 and 2021. 

They often forget that those years were shaped by ultra-cheap debt, with mortgage rates in many cases below 2%. 

That environment compressed affordability constraints and encouraged buyers to stretch further than they would have normally felt comfortable.

A modest difference in monthly payments often felt manageable against expectations of continued price growth – particularly among younger buyers who had only ever experienced ultra-low interest rates. 

Indeed, what’s often forgotten is that sub-2% mortgages were historically unusual. For much of the pre-2008 period, rates of 4–6% were normal. 

The cheap-money era was the exception, not the rule – and today’s affordability reset reflects a return to more typical borrowing costs rather than an abnormal spike.

So when rates reset sharply in late 2022 toward 5-6%, borrowing capacity contracted materially. The same household income could now support a significantly smaller loan.

Monthly payments consumed a larger share of income, and the tolerance for overpaying diminished. Affordability did not collapse, but it reset to a stricter framework.

Since the Global Financial Crisis, mortgage regulation has been far stricter. The Mortgage Market Review introduced tougher affordability testing, and borrowers have typically been stress-tested several percentage points above their initial rate. 

That regulatory conservatism is one of the key reasons we haven’t seen a wave of forced selling, notable spikes in mortgage arrears and repossessions despite the interest rate shock.

According to data from the Bank of England, the vast majority of outstanding UK mortgages were taken out at loan-to-value ratios below 75%, meaning most borrowers hold fairly meaningful equity buffers.

Arrears data supports this. According to UK Finance, around 1% of homeowner mortgages are currently in significant arrears – just under 100,000 cases. During the post-financial-crisis peak, that figure was more than double in absolute terms and close to 3% of outstanding mortgages.

Repossessions tell a similar story. In 2023, there were roughly 3,600 homeowner repossessions, compared with more than 48,000 in 2009. Although repossessions have ticked up slightly from historic lows, they remain a fraction of post-financial-crisis volumes.

At the same time, unemployment has remained comparatively low. Data from the Office for National Statistics has consistently shown unemployment rates hovering near multi-decade lows through much of the rate-hiking cycle. 

Continued employment has allowed most households to absorb higher mortgage payments, even if disposable income has been squeezed.

Rather than a sharp nominal correction, what we’ve seen is a quieter adjustment through inflation. UK CPI peaked at just over 11% in October 2022, the highest level in four decades, and cumulative inflation since 2020 has risen by a little over 20% (although many economists and indeed the general public believe the real figure to be much higher).

Over that same period, average UK house prices have increased by a broadly similar percentage in headline terms. Since late 2022 in particular, prices across much of the country have been largely flat in nominal terms.

Once you adjust for inflation, real house prices have effectively gone nowhere – and in many regions they are lower than their 2022 peak in real terms.

This does take off the pressure on the market to a degree and makes buying a home somewhat more accessible.  But, at the same time, affordability remains stretched for many households – particularly when it comes to deposit requirements, monthly payments and the other overheads involved in being a homeowner.

And these affordability constraints are compounded by transaction friction, most notably Stamp Duty Land Tax. Stamp Duty doesn’t just raise revenue – it creates behavioural thresholds. Because it’s structured in bands, buyers become highly sensitive around certain price points.

You’ll often see properties cluster just below £250,000 and £925,000 because those are the formal SDLT thresholds where the marginal rate increases.

But £500,000 also acts as a barrier – not because of tax bands, but because it represents a significant affordability jump for many households. It’s often the point where loan-to-income ratios stretch and deposit requirements rise meaningfully, so pricing tends to bunch just below it.

This all distorts pricing psychology and compresses negotiation ranges. In some cases, buyers will stretch significantly to avoid the next tax tier – in others, they pull back entirely.

So SDLT doesn’t just influence whether people move. It influences how much they’re prepared to pay.

The buy-to-let sector also plays a role in this slower dynamic. Over the past decade, tax changes such as Section 24, tighter underwriting standards and higher mortgage rates have reduced the attractiveness of leveraged buy-to-let investment. 

Purchasing volumes among smaller landlords have become more selective, and in some regions investor participation has cooled. Institutional build-to-rent capital remains active, but it is concentrated in specific schemes and geographies. 

The marginal investor who once competed aggressively for entry-level houses is less visible than during the cheap-money era. That removes an incremental source of demand from parts of the market, particularly for lower and mid-value stock.

When growth expectations flatten or become uncertain, conviction weakens. Buyers become more price-sensitive and less inclined to overbid. Even needs-driven purchasers – moving for schools, employment or family reasons – negotiate harder and take longer to commit. 

Extended time on market reinforces the perception that “nothing is selling,” even when aggregate transaction numbers suggest otherwise.

Elevated stock magnifies this effect. With over 650,000 homes available nationally, sellers lose the scarcity advantage that characterised much of the 2010s and early 2020s. 

Two- and three-bedroom houses in sensible condition, alongside realistically priced flats without excessive service charges, still transact well in many regions. 

But aspirationally priced, niche or higher-value properties often experience greater friction. 

One seller secures a relatively smooth sale; another faces months of limited traction. Both realities can coexist within a structurally slower market.

Taken together, these forces create a housing market that is neither collapsing nor booming. 

There is more supply competing for attention, borrowing headroom is tighter, transaction friction discourages mobility, investor participation is more selective and sellers are adjusting to a new equilibrium.

Bank Rate easing could shift that balance at the margin. If the Bank of England continues to reduce rates gradually, mortgage pricing will soften and borrowing capacity will improve incrementally, which could help restore confidence and shorten decision cycles. 

However, with inflation proving sticky and policymakers cautious, a return to the ultra-low sub-2% mortgage era looks highly unlikely. Any stimulus is therefore more likely to be gradual than dramatic.

Prices are broadly stable in nominal terms and softer in real terms. Transactions continue at functional levels, yet the pace is measured rather than urgent. Houses are selling – just not with the speed, leverage and psychological momentum that defined the ultra-low-rate era.

A big thanks for watching tom the end. 

If you found this breakdown useful, please like the video and subscribe to the channel. I’ll continue sharing clear, evidence-based insights so you can navigate these conditions with confidence. See you in the next one.