In what will come as good news for the UK’s homeowners and buyers, a new market analysis by the House Buyer Bureau has revealed that the number of property transactions estimated to have been subject to collapse across the UK market has continued to decline during the first quarter of this year, falling to the lowest quarterly level seen since Q1 of 2019.
Reading the news headlines, many would assume that the UK property market is heading toward a catastrophic crash; however, people tend to ignore the simple fact that bad news sells. The desire to own property will always underpin the property market, and although prices may well drop in the near term, underneath the doom and gloom, there is some more positive news, one being that property fall-through numbers are in reverse.
The latest industry index on property fall throughs by property purchasing specialist House Buyer Bureau has revealed that the number of property transactions estimated to have been subject to collapse across the UK market has continued to decline during the first quarter of this year, falling to the lowest quarterly level seen since Q1 of 2019.
House Buyer Bureau analyses the number of transaction fall-throughs across the UK property market, what this means in terms of the average cost of a fall through and what the total cost to the property market is as a result.
The latest index shows that the average cost of a fall-through during the first quarter of 2023 increased by 2.1% versus Q4 2022, now averaging £3,370 per transaction.
However, since September of last year and following a mini-budget, the housing market started to cool, with a notable drop in market activity from buyers and sellers compared to the previously hot market conditions spurred by the pandemic.
The silver lining of this drop in market activity has been a reduction in the volume of transactions collapsing, and it’s estimated that just 63,970 transactions fell through during the first three months of this year.
This marks a 16% quarterly decline versus the final quarter of 2022 and the second consecutive quarterly decline since a market peak of 90,188 fall-throughs seen in Q3 2022. It also equates to 11% fewer fall-throughs on an annual basis, and the total seen during Q1 2023, which is the lowest since the first quarter of 2019 before the pandemic property market boom took off.
A drop in the volume of fall-throughs has also led to a reduction in their total estimated cost to the market. Despite the average cost of an individual fall through increasing, the total estimated cost of the 63,970 transactions to have collapsed during Q1 has dropped by 14% on a quarterly basis.
That said, fall throughs still cost the nation’s homebuyers and sellers £215.6m during the first three months of this year alone, although this is the lowest quarterly total seen since Q4 2021.
Managing Director of House Buyer Bureau, Chris Hodgkinson, commented, “Market activity has been gradually declining since the closing stages of last year, and we’ve seen these more subdued market conditions continue during the first quarter of this year.
A silver lining to this notable reduction in sales volumes has been a consequential drop in the number of transactions collapsing, and this, on the face of it, is a positive. However, the individual cost of a fall-through has actually increased, and it’s also fair to say that while the total number of fall-throughs is on the slide, current market conditions are ripe for an increased threat of a sale collapsing.
Buyers are offering less, and sellers are standing their ground. We’ve seen multiple interest rate hikes spur lenders into increasing rates, and transactions are taking far longer to complete. All of these factors can increase the chance of a fall-through, and so while total numbers may be down, buyers and sellers should remain aware of the threat and do all they can to negate it in order to reach the finish line.”
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