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Just checking, but I presume you mean low price elasticity of supply, here? As in, increases in price do not increase the supply of new builds or result in more second-hand homes on the market.
Always lovely to see the basic supply/demand pricing mechanism break when it comes to the largest purchase ever 🙃
slippers-
Sorry, you are right, I meant high inelasticity (or low elasticity).
Marginal housing supply = land plus ability to build. House prices are high enough that almost any bit of UK land is already economically viable so the binding constraint is planning / labour / materials.
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increases in price do not increase the supply of new builds
They kinda do. Or rather falling prices reduce availability of new builds as big builders like Barratt and Persimmon slow their rate of build if the market slows to control supply. Also smaller developers find it harder to get finance to complete their projects in falling markets.
NickCJ
Hefty
I wasn't assuming that BTLs would be included.
Bottom line I think that the benefits of these types of tax breaks predominantly accrue to property owners and sellers in the form of higher prices rather than to buyers in the form of cheaper mortgages. That's the reality of a market with a high elasticity of supply.