Thirty-one Percent Of Property Sales Collapsing Before Completion
Thirty-one percent of property sales in England and Wales are collapsing before completion, according to new industry figures.
Of those sales that fail, it is suggested that 50 percent are due to the buyer getting cold feet or pulling out after a negative property survey. An additional 30 percent collapse due to difficulty securing lending and the remaining 20 percent are attributed to gazumping and a change in the buyer’s circumstances.
The Reasons Behind House Sales Falling Through
Quick Move Now, who published the figures, have been reporting on the fall through rate for a number of years. Danny Luke, managing director of Quick Move Now, says both the figures and the reasons for the failed sales offer unique insight into the state of the property market.
Danny commented: “The fall through rate has remained largely consistent since the start of the year, dropping by just one percent between the first and second quarters, which is good news for the property market and shows a level of stability.”
The reasons behind the failed property sales, however, indicate a growing uncertainty and nervousness in the market, from both buyers and mortgage lenders. Half of the property sales that fell through before completion were attributed to buyers pulling out of the sale, changing their mind and switching to a different property, or withdrawing after an unfavourable property survey. At the height of the property market boom, in the summer of 2021, just eleven percent of property sales fell through before completion as buyers rushed to get their purchase through before the end of the stamp duty holiday. Towards the end of last year, we saw the number of collapsing sales rising as savvy buyers anticipated a market slowdown and tried to renegotiate a lower purchase price once a sale had been agreed. Now it seems buyers aren’t even attempting to renegotiate and are, instead, just pulling out of the sale if the property offers up any challenges or perceived risks.
“It’s also important to address the increasing number of buyers who are struggling to secure a mortgage. In the final quarter of 2021, just seven percent of failed sales were attributed to being unable to get a mortgage. By the first quarter of this year that figure had risen to 25 percent, and in the last quarter it rose again to 30 percent. With an increase in the cost of utilities and exceptionally high inflation, I think this trend of mortgage lenders being increasingly cautious is something we can expect to see more of in the coming months. This will have an impact not only on the buyer struggling to get finance, but also anyone else within the property chain. Failed sales are not only frustrating, they can also be very costly. I can only imagine that we’re going to see a lot more homeowners in need of a fast sale chain-break solution in the next few months.”