Between the long-lasting consequences of COVID-19, and the cost-of-living crisis, the UK property market seems to be unpredictable and uneasy.
New data released by Quick Move Now, a home buying company, has revealed that there has been a large increase of residential property sales falling through before completion. During the third quarter of 2022, 41% of sales fell through, which is a 9% increase in failed sales from Q2 where the fall-through rate was 25.49%.
The data released by the home buying company has also revealed the reasons for these collapsing sales. 41% of sales fell through because they simply changed their mind about the purchase. The second most recorded reason was that respondents were unable to get a mortgage. This suggests growing caution from both buyers and lenders.
Danny Luke, Quick Move Now’s managing director, said: “It’s concerning to see that the number of property sales falling through before completion seems to be on the rise again. It is, however, not a huge surprise given the current turmoil in our economy.
“It’s been well documented that measures to boost the property market after Covid, alongside a shortage of stock, led to an overheated market and steep rises in property prices. It would be naïve to think that the economic climate we now find ourselves in would not heavily impact the confidence of both buyers and mortgage lenders.
“Rising inflation and interest rates will have a huge impact on affordability, and anxiety is rising rapidly. Just last week we witnessed the removal of 40 percent of mortgage products from the market and saw a growing number of predictions of a crash.
“It’s little surprise that the biggest causes of failed property sales in the last three months have been buyers changing their minds and difficulty securing mortgage finance. Sadly, I would expect this pattern to continue throughout the final quarter of this year and well into 2023.
“The government recently announced another stamp duty reduction in a bid to keep the market going, but in reality, any saving made on stamp duty will be wiped out by the rise in interest rates for those requiring a mortgage.”
However, despite the market concerns, an office manager at an estate agent in Brighton, has claimed that it was "a little too early" to assess the state of the property market.
He continued: "There is a lot of media scrutiny surrounding the mini budget and the recent government decisions. I think everyone is looking for more reassurance and prospect of a more settled economy moving forward.
"Buyers are especially waiting to see how things alter with the changes to mortgage deals and interest rates, as well as their own finances.
“There are still many motivated buyers in the market. However, they are now able to take their time before committing to making an offer, which wasn't the case a few months ago due to the fierce competition among buyers.
“New property stock is appearing, which is a positive and this will provide buyers with more choice, especially helping to encourage those who were toying with the idea of moving but were put off by not finding what they wanted.
“Price reductions are now more evident across the board and this highlights the need to set a fair and competitive asking price from the very start, ensuring sellers achieve the best possible price for their homes.