Via Peter Smith on FB, some research by Neal Hudson:
The level of private house building is closely linked to credit availability and turnover in the wider housing market. There has been a 10 to 1 ratio between overall market transactions and private house building starts for the last 25 years and it appears to have held firm despite recent policy interventions. The reasons for this ratio are poorly understood...
He then includes a chart showing that the ten-to-one ratio has held firm for a lot longer than that.
Fascinating.
I can understand that there would be some sort of correlation between the two, but not as striking as that.
The only way I could explain it is to assume that (say) half of new builds are bought by people selling an existing home and that each 'chain' of movers has twenty households in it. (one-half times twenty = 10, for illustration I could have chosen two-thirds and fifteen or any other two numbers who make ten).
In real life, few chains of people who all have to complete on the same day are that long. I think if there are more than five or six, they inevitably one person will pull out or be unable to complete and so no transactions take place at all.
So at the other of the chain, there must be one person who can buy his new home without selling his old one; either because he was renting or because he does not want or need to sell it until later, thus starting a new chain.
But the real explanation is probably something completely different and this is just a wild guess.
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