Another year and the structural problems in the housing market show no signs of going away. While higher interest rates only pushed house prices down by a relatively modest 1.8 per cent last year, English homes are still around the priciest relative to earnings in 150 years. While base rates may have peaked, and mortgage rates are starting to fall, the underlying issues remain much the same.
Even though demand has dropped, supply is still low, which keeps prices high. Some housebuilders, such as Vistry (VTY), have responded to this by repositioning. Its share price jumped last year after it revealed plans to pivot its whole business. Rather than building for private owner-occupiers, it is building "affordable homes" through bulk sales to institutions – such as local authorities, social housing providers and private equity – who rent the properties out.