Why UK Property Needs Transactions, Not a New Price Boom

The latest intervention from within the estate agency profession delivers an uncomfortable truth to a market conditioned to measure success in percentage price growth: the UK housing market does not need another boom. It needs movement. Transaction volumes, not valuations, are the metric that should be occupying policymakers, lenders and industry bodies over the coming year, because a market defined by low turnover is a market storing up structural problems regardless of what headline price indices suggest.

This matters enormously for investors and landlords because the last two property cycles have conflated rising prices with market health. Between 2020 and 2022, average UK house prices rose by more than 20%, according to Nationwide data, yet transaction numbers told a different story — HMRC figures show completed residential sales falling from a pandemic-era peak of around 1.5 million in 2021 to closer to 1.02 million in 2023, a drop of roughly a third. A market where prices climb while fewer people actually move is not a healthy market; it is an illiquid one, characterised by wealth effects for existing owners and shrinking opportunity for everyone else, particularly first-time buyers and those seeking to trade up or downsize.

The regional picture illustrates why volume matters more than value. In Manchester and Leeds, transaction activity has held up comparatively well thanks to strong rental demand and relatively affordable entry prices — Manchester's average property price of around £240,000 remains roughly 45% below London's, sustaining a churn of first-time buyers and buy-to-let purchasers. Birmingham and Liverpool show similar resilience, buoyed by regeneration investment and comparatively generous yields of 6-7% gross for landlords. London and Surrey tell a starkly different story: with average prices in the capital exceeding £520,000 and stamp duty costs biting hard on family-sized homes, transaction volumes in prime and outer-London boroughs have fallen more sharply than the national average, leaving a stock of unsold or slow-moving properties that suppresses both agent revenues and mortgage lender activity.

The case for prioritising movement over price growth rests on three structural realities that any serious market participant should recognise. First, stamp duty thresholds — recently adjusted but still capturing far more transactions than a decade ago — actively discourage the sort of housing chain activity (downsizers freeing up family homes, young professionals moving for job opportunities) that keeps stock circulating efficiently. Second, mortgage affordability, even with base rates having eased from their 2023 peak of 5.25% to around 4.75%, remains stretched relative to incomes, meaning fewer buyers can transact even when they wish to. Third, an ageing population sitting in under-occupied homes, disincentivised from selling by tax and moving costs, represents a supply problem no amount of new-build activity can fully solve.

For buy-to-let landlords, a low-transaction market cuts both ways. Reduced turnover in owner-occupied stock pushes more prospective movers into the rental sector, sustaining the rental growth that has averaged around 8-9% annually across major UK cities over the past two years. But it also signals a market where exit strategies — selling to realise capital gains — become harder to execute efficiently, particularly in London where average time-to-sell has stretched beyond 90 days in some boroughs. Developers face an analogous dilemma: building for a market where completions outpace the willingness or ability of existing owners to sell and move creates a mismatch between new supply and effective demand, a factor increasingly visible in Birmingham and Leeds city-centre apartment schemes reporting slower absorption rates than pre-2022 comparables.

Over the next six to twelve months, the sensible expectation is for continued modest price growth — Savills and Knight Frank both forecast UK-wide gains in the 2-4% range for 2025 — rather than a return to double-digit inflation, alongside a gradual, policy-dependent recovery in transaction volumes as mortgage rates ease further and any stamp duty relief filters through. Commercial investors backing residential-adjacent assets, from build-to-rent to later-living developments, should treat transaction velocity as a leading indicator ahead of price data, since it typically signals shifts in buyer confidence and lender appetite before valuations catch up.

The conclusion for market participants is unambiguous: chasing another price boom would deepen the affordability crisis for first-time buyers while doing nothing to solve the liquidity problem strangling chains across the country. A market that prioritises healthy transaction volumes — even at the cost of flatter price growth — is the more investable, more sustainable outcome, and those positioning portfolios around cities with strong churn, such as Manchester, Leeds and Birmingham, are better placed than those banking on London's stalled prime market to reignite.