Rise in fall-throughs "likely to be maintained into 2023"
The number of property transactions falling through, as well as the cost associated with them, has seen a sharp increase in the third quarter of 2022, property purchasing specialist House Buyer Bureau has reported.
The latest analysis of transactions across the UK property market has shown that from July to September last year, 90,188 transactions are estimated to have fallen through, a 15.6% increase on a quarterly basis and a 3.6% uplift versus the same period of the previous year. This is also the highest quarterly number of fall-throughs recorded over the last five years.
House Buyer Bureau also noted that a combination of soaring inflation and increasing house prices have pushed the average cost of a property transaction collapse to £3,337. As a result, the real estate consultant estimates that homebuyers and sellers were hit by a total estimated cost of almost £301 million due to their transactions falling through in Q3. This total cost is not only 18.7% up on the previous quarter, but also 16.3% on an annual basis.
Despite the record numbers, House Buyer Bureau estimates that the total number of fall-throughs seen in 2022 will still sit some 6.7% below the total seen in 2021. This is because the first two quarters of the year saw a far lower level of transactions falling through, with the latest quarterly spike suggesting that the property market could be in for a rougher ride in 2023.
“We’ve seen a consistent increase in the number of property transactions falling through in recent years and despite a fairly settled start to 2022, the latest data shows that the number of sales collapsing hit a five-year high in the third quarter of 2022,” Chris Hodgkinson (pictured), managing director at House Buyer Bureau, commented.
“This is almost certainly due to the turbulence that came via the mortgage sector in September, as lenders pulled a raft of products and increased mortgage fees in reaction to the Bank of England’s aggressive attempts to curb inflation via a string of consecutive interest rate increases.
Hodgkinson said many buyers found that they could no longer afford the cost of borrowing, which has led to swathes of property sales falling by the wayside during the second half of last year.
“Unfortunately, we saw a further hike to the base rate come in December and so, the likelihood is that this increased level of property fall-throughs will not only be apparent within the final quarter of 2022, but it’s likely to be maintained into 2023.”
Do you agree that fall-throughs will continue to rise this year? Let us know your thoughts by leaving a comment in the discussion box at the bottom of the page.