The UK housing market is experiencing a freeze caused by accumulated transaction costs rather than house prices alone, according to David Powell, CEO of Andrews Property Group.
Powell argues that the issue extends beyond high property values to encompass what he describes as a “stacking” of costs that affect buyers at every level of the market.
First-time buyer barriers
Entry-level purchasers face multiple obstacles including high deposit requirements, elevated mortgage rates, limited supply in affordable areas, and stamp duty thresholds. Powell notes that even when property prices soften, monthly borrowing costs continue to prevent market entry.
Transaction friction for existing homeowners
Moving costs represent a significant barrier for existing homeowners, according to Powell’s analysis. The cumulative expense of stamp duty, estate agency fees, legal fees, surveys, mortgage arrangement fees, removal costs, and property preparation often consumes equity gains, leading homeowners to remain in place and renovate instead.
Downsizer constraints
Older homeowners seeking smaller properties face particular challenges. Powell identifies stamp duty, scarce suitable housing stock, and disproportionate moving costs as factors preventing downsizing. This dynamic restricts housing supply at higher price points and blocks movement throughout the market chain.
Industry investment requirements
Powell contends that reducing transaction costs cannot be achieved by cutting fees for estate agents, conveyancers, surveyors, or brokers. He argues the sector requires investment in better compensation to retain professionals, digital infrastructure, conveyancing modernisation, integrated customer processes, fraud prevention, and improved data sharing between stakeholders.
Proposed government interventions
Powell suggests several policy measures could address market mobility without distorting prices. These include structural stamp duty reform with reduced rates for downsizers and first-time buyers, incentives for energy-efficient homes, and elimination of threshold cliff edges.
Additional proposals include tax credits or grants for moving costs targeting first-time buyers, downsizers, key workers, and those relocating for employment. Powell also advocates for government-backed investment in digital ID systems, upfront property information, faster local authority searches, standardised data formats, and AI-assisted conveyancing tools.
To protect against offshore competition, Powell recommends minimum professional standards, tax incentives for UK-based training, and support for apprenticeships in property, legal, and surveying roles.
Market implications
Powell frames the issue as one of transactional friction rather than lack of demand. He argues that government should treat moving costs as infrastructure investment, linking housing market mobility to economic flexibility, labour movement, and national productivity.
The analysis suggests that without policy intervention to reduce transaction costs, the UK housing market will remain constrained regardless of house price movements or mortgage rate changes.