# Britain’s housing market has a moving problem

_ONS data show first-time buyer mortgage sales are higher than in 2006, while sales to existing homeowners have more than halved. Andy Burnham’s new scheme helps the part of the market that is working. Stamp duty is holding back the rest._

Neil Woodford · 2 October 2026 · 10 min read

![An overgrown for sale sign outside a house](https://cdn.sanity.io/images/v3acfbvo/production/65ce0dc91c7f6022817f73d95a5deae8aec9f1c4-1672x941.jpg?w=1600&fit=max&auto=format)

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In last week’s [Weekly roundup](https://noisecancelling.co/read/diplomacy-gathers-pace-the-chancellors-room-shrinks), I mentioned I would write about some really interesting data the ONS just released on the UK mortgage market. I had no idea the subject would become much more topical over the weekend, following Mr Burnham’s announcement of a new homes scheme for first-time buyers called [“Your First Home”](https://www.bbc.co.uk/news/articles/cv8e33gdw17no). 

Whilst timely and, on the face of it, extremely welcome, I can’t help thinking that the assumptions underlying this initiative might not have been as well-informed as one might have hoped. That said, if it helps more young people buy their first home and, in turn, boosts new home building, it will have served its purpose.

_[Embedded media](https://x.com/andyburnham/status/2103887433540436340)_

Before looking at this new scheme, whose details will be announced in the Budget, I want to start with the ONS data, which I suspect will surprise many readers because, as is so often the case, the facts do not match the broader consensus commentary about the housing market.

_[Watch: Watch the Show Episode where we discuss this — Stamp Duty Has Quietly Doubled. That's Why Britain Stopped Moving](https://www.noisecancelling.co/the-show)_

## The data

The [data](https://www.ons.gov.uk/peoplepopulationandcommunity/housing/bulletins/mortgagestatisticsuk/2025) covers the number of mortgage sales across the UK from 2006, when the housing market was booming, to 2025, when it wasn’t. To put this in context, 2006 was two years before the financial crisis hit in 2008, so problems were clearly brewing in the market by then, but a comparison with what prevails now is instructive.

First, the headline data to compare the two years. (This data isn’t from the ONS publication but is sourced from the Bank of England via my favourite economist.)

![The housing market, 2006 and 2025](https://r4at4qm6kmohrtvq.public.blob.vercel-storage.com/charts/chartDoc.slaying.c1-2006-vs-2025-94c526e50ed3-light.png)

_Adjusted for CPI inflation of 73.8%, house prices are about 5% lower than in 2006 and net mortgage lending is 70% lower, even though mortgage rates are lower._

I suppose the first point to make is that these are nominal figures and are not adjusted for inflation over these 20 years. In real terms, one needs to adjust for cumulative inflation over this period of 73.8%, based on the CPI. _(Neil in the margin: The crucial move: prices rising in cash terms can still be falling once you strip out two decades of general inflation. Everything that follows is stated in real terms, which is why the figures look so much bleaker than the usual headlines.)_

So, in real terms, average house prices have fallen over this period by about 5%, mortgage loans have fallen by about 7%, and net mortgage lending has collapsed by 70%, despite the fact that the rate of interest on existing and new loans was considerably lower in 2025 than in 2006. Finishing off the comparison, housing transactions are down by just under 30%, and the number of new homes built is down by just under 20% and a very long way off Angela Rayner’s 300,000 pa target.

To give further context to these headline numbers, over the same period the population of the UK has grown by 10 million to just under 70 million, and the total housing stock has increased by about 3 million homes, from 26.5 million to about 29.5 million. One data point that stands out to me is the ratio of transactions to housing stock, which back in 2006 was 6.3% and by 2025 had fallen to 4.1%, a reflection of the now “frozen” nature of the housing market, with all of the associated implications for social and geographic mobility and Laffer curve outcomes for SDLT receipts. _(Neil in the margin: The idea that, beyond some point, raising a tax rate collects less, not more, because it strangles the activity being taxed. My whole argument is that stamp duty now sits on the wrong side of that curve.)_

So, back to the ONS data and the comparison of the mortgage market back in 2006 with the market in 2025. (The data is slightly different from the Bank of England’s above because mortgage sales are not the same as mortgage approvals.) In 2025, there were 717,519 mortgage sales in the UK, up 16% on 2024 but down 34.5% on 2006’s level of 1,095,448. Although total mortgage sales were down, first-time buyer (FTB) mortgage sales were actually up slightly, from 369,596 in 2006 to 379,207 in 2025, which means that non-FTB mortgage sales were down 53% over the same period.

![First-time buyers above 2006, home movers down 53%](https://r4at4qm6kmohrtvq.public.blob.vercel-storage.com/charts/chartDoc.slaying.c2-mortgage-sales-84a28f207435-light.png)

_First-time buyer mortgage sales were 3% higher in 2025 than in 2006. Sales to existing owners buying another home were 53% lower. First-time buyers' share rose from 33.8% to 52.8%._

To complete the picture, FTB mortgage sales were 34% of total sales in 2006 and 53% in 2025. The median FTB loan-to-value (LTV) ratio was 85.6% in 2025, its highest level since before the financial crisis, indicating that buyers are borrowing a larger proportion of property values. The average loan-to-income ratio was 3.5x in 2025 for all mortgage sales and a very similar 3.6x for first-time buyers. _(Neil in the margin: The loan as a percentage of the property price; 85.6% means the buyer is putting down only about a 14% deposit. Higher LTV means more borrowing and less cushion if prices fall.)_

## Observations

As I’ve already said, the housing market was booming in 2006, a year in which average house prices increased by between 8% and 10%, depending on which data series you look at, and net mortgage lending increased by a remarkable 24%.

Although the housing market did recover a little in 2025 on the previous year, it could hardly be described as buoyant. For example, average house prices increased by only 1.7% in the year, which compares with CPI inflation of 3.4%.

The popular narrative underlying the UK housing market is that it is assailed by many challenges, especially for first-time buyers. [Knight Frank says](https://www.knightfrank.co.uk/research/article/2026/4/the-case-for-new-housbuilding-stimulus) affordability has improved over the past year, but “not enough to bring homes within reach of the average buyer”. The BBC agrees: [analysis carried out for it in July](https://www.bbc.co.uk/news/articles/cy8mnvk4r48o) found that today’s 20-somethings face “a tougher start to adulthood than any generation in almost half a century”, with home ownership among 25-year-olds down from 43% in the mid-1980s to 15%. A recent [Yorkshire Building Society survey](https://www.financialreporter.co.uk/first-time-buyer-mortgage-perceptions-highlight-vital-role-of-broker-advice-ybs.html) found that 56% of FTBs “believe” it will be difficult to get accepted for a mortgage, with nearly 65% of repeat renters (renting is more expensive than servicing a mortgage on the equivalent property) suggesting that getting a mortgage “would be difficult”, with many seeing ownership as out of reach.

And yet, the number of FTB mortgages in 2025 is up on the boom year of 2006, when lending growth was at 24%, and it was pretty easy to get an FTB mortgage. Indeed, at the time, FTBs could get a 125% LTV mortgage, thanks to Northern Rock, in a product wrapper marketed under the “Together” brand. _(Neil in the margin: Northern Rock's notorious "Together" product lent more than the house was worth, leaving borrowers instantly in negative equity. The bank's collapse in 2007 produced Britain's first bank run since 1866 and became a symbol of pre-crisis recklessness.)_

Once again, the popular narrative that FTBs face impossible odds when buying a house is not the whole truth. The data suggests something quite different. In fact, it shows that the FTB mortgage market is rather buoyant, and certainly significantly more so than the rest of the mortgage market, where total net lending is down 70% in real terms since 2006, in stark contrast to the FTB mortgage market, which has grown modestly (as measured by the number of sales) over the same period.

Now, I am not suggesting that FTBs shouldn’t get more help. I am all for helping more young people to own their own home. More buyers equals more new houses of all tenures and a better outcome for the economy in general. However, if a proper diagnosis of the real problems confronting the housing market was undertaken, a different, important conclusion would be drawn.

The most acute problems confronting the housing market are those which assail the second-hand market, or the “existing homeowner market”. Here housing transaction volumes are down significantly, net lending volumes have collapsed (70% in real terms since 2006), and mortgage approvals have halved over the same period. Indeed, housing transactions are so low now that, as a percentage of owner-occupiers, they are back near the levels plumbed at the depths of the financial crisis.

![A comatose market](https://r4at4qm6kmohrtvq.public.blob.vercel-storage.com/charts/chartDoc.housing.c8-transactions-b80ab15892c5-light.png)

_Owner-occupiers moved roughly every seven years in the late 1980s. On current transaction rates it is closer to once every sixteen._

So, what might explain this anomaly in the housing market, where activity in the first-time buyer domain is pretty buoyant but completely depressed in the second-hand market? By now, I suspect most readers will have worked this out, which seems to be beyond Westminster and Whitehall. The real problem is that Stamp Duty Land Tax has killed the second-hand housing market and disabled social and geographic mobility in the UK. 

Successive governments have greedily increased the rates of this stealth tax (the ludicrously high rates are basically fixed, rather like income tax bands, and are not indexed), so much so that activity in this important part of the economy has been completely crushed, with consequent impacts on growth and on tax revenue, where the Laffer effect is all too evident.

For those that still doubt the facts, SDLT is set at zero for FTBs up to £300,000 and 5% between £300,001 and £500,000 – in other words, nearly all FTBs pay no SDLT.

In fact, despite huge increases in the rates of SDLT since 2006, the receipts from this moronic tax have actually fallen in real terms. In 2006/07, residential SDLT receipts were £6.4bn. In 2024/25, [they were £10.4bn](https://www.gov.uk/government/statistics/uk-stamp-tax-statistics/uk-stamp-tax-statistics-2023-to-2024-commentary). Had they just kept pace with inflation over this period, they would have reached £11.1bn, and had they kept pace with the growth in public spending (it’s increased by about 2.5x over this period, from £552bn to £1,368bn), they would have reached about £15.9bn, around 50% more than the current level.

![Residential stamp duty: what it raised, and what it would have raised](https://r4at4qm6kmohrtvq.public.blob.vercel-storage.com/charts/chartDoc.slaying.c4-sdlt-receipts-f4d5509cf97e-light.png)

_Residential stamp duty raised £10.4bn in 2024/25. Had 2006/07 receipts simply kept pace with inflation, it would have been £11.1bn._

## Conclusions

I welcome Mr Burnham’s new FTB initiative, which will be especially popular in the boardrooms of the UK’s housebuilders, I am sure, despite them having to pay a fee to the government to participate. In outline, it looks like a second reincarnation of the Help to Buy scheme first introduced by George Osborne in 2013, and will apparently include a 20% equity loan to FTBs who have a regular income but who find it difficult to save for a deposit ([see my recent piece](https://noisecancelling.co/read/slaying-popular-housing-myths)) and don’t have access to the Bank of Mum and Dad. The loan will have an initial interest-free period of six years and require a 2.5% deposit. (This does address the issue I wrote about in that piece, which highlighted why banks can’t offer high-LTV loans.) _(Neil in the margin: Osborne's 2013 scheme offered a government equity loan alongside a small deposit. Critics argued it mainly pumped up prices and padded housebuilder margins rather than expanding supply.)_

_Neil on why the deposit is the real hurdle:_ [Slaying popular housing myths](https://www.noisecancelling.co/read/slaying-popular-housing-myths) — First-time buyers face mortgage payments near a 55-year low – and the biggest deposit hurdle since the 1980s. The villain is not the one in the popular narrative.

The details of the scheme will be announced in the Budget at the end of October, but if it’s anything like this, it will have a significant impact on the market, in my judgement. The scheme will be open for registration as soon as the end of 2026. Compared with a 90% mortgage at 5.25% on the average FTB property (£230,000), which costs about £1,255 a month, a buyer using the scheme would put down 2.5%, take the 20% interest-free equity loan and need a mortgage of about £180,000 at around 5%. That costs about £1,054 a month, the equivalent of cutting the mortgage rate on the 90% loan to about 3.7%. Clearly this is going to be very popular with FTBs.

**£5,750** — Deposit on a £230,000 new-build home under Your First Home

Whilst we are on the subject, it’s worth highlighting that the previous scheme, which many on the left of British politics regularly criticised, has recently been the subject of a [government review](https://www.gov.uk/government/publications/evaluation-of-the-help-to-buy-scheme/evaluation-of-the-help-to-buy-scheme-evaluation-findings-report) which concluded that it had been “very high value for money” and generated £25.1bn of social value over the scheme’s lifetime.

There is a but here, though. As welcome as this scheme is, it does not address the real underlying problem in the ossified UK housing market, which is still 90% dependent on second-hand transactions. The deep freeze inflicted on this market by reckless government taxation has not only eroded mobility across the UK economy, both geographically and demographically, but it has also crushed economic activity linked to housing transactions that benefit banks, solicitors, estate agents, insurers, removal companies, small construction firms, equipment rental companies, the DIY retail industry, plumbers, electricians, carpenters, landscape gardeners, painters, decorators and all the other trades linked to home improvement. It’s also harmed the government, most ironically, because of the Laffer effect, as receipts have fallen in real terms as SDLT rates have climbed to ever more ludicrous levels.

There is a solution, and it doesn’t require the wisdom of Solomon. Scrapping this moronic tax altogether would cost the government £10bn. But if the government kept SDLT on additional dwellings (second homes and buy-to-let properties), which raised an astonishing £5.4bn in 2024/25 out of the total £10.4bn, it would only cost the government £5bn in lost receipts. 

But at a stroke, abolition for primary residences would unleash a wave of economic activity that would generate substantial tax revenue. As a very rough calculation, if cutting it for these transactions resulted in higher growth of 0.5% pa over a three-year period, that would generate additional tax revenue of £7.2bn in year one, £7.6bn in the second and £7.9bn in year three, before any calculation of the additional benefits of faster growth in the economy on welfare spending or on youth unemployment and apprenticeships, for example. (These numbers are based on the forecast tax share of GDP.)

**£5.4bn** — SDLT raised on purchases of additional dwellings in 2024/25

So, in brief, assuming SDLT receipts are maintained, which I would argue is an optimistic assumption, getting rid of it on transactions other than second homes would cost the government £5bn in lost revenue. However, if my modest assumptions on additional growth were correct, increased economic growth would generate over £7bn of additional tax revenue in year one and, **hey presto, the tax cut more than pays for itself**.

Will this government do it? After all, it would match the radical rhetoric and lead to higher growth. But the answer is probably not, partly because it’s highly unlikely that the OBR’s calculations of its effects would match mine, and I imagine it might not align with the political philosophy of many Labour front- and backbenchers (property-is-theft types, for example).  _(Neil in the margin: The Office for Budget Responsibility, the independent forecaster that scores Budget measures. It tends to assume only modest behavioural response to tax cuts, so it would be unlikely to credit Neil's growth-pays-for-itself arithmetic.)_

But, in a parallel universe where I’m PM and I inherited this situation, it would be the first thing I would do. A tax cut that pays for itself, delivers higher growth, reduces youth unemployment and improves mobility across the economy looks to me like the definition of an absolute no-brainer, and this might be why [Kemi Badenoch has already said that she would do it](https://www.instituteforgovernment.org.uk/explainer/stamp-duty-land-tax).

_[Embedded media](https://www.youtube.com/watch?v=RCsGTt-_yfE)_