Almost a third of property sales have fallen through this year – London Wallet

Almost a third of residential property sales fell through before completion in the first three months of this year, new figures show.

According to Quick Move Now, 31.3% of property sales fell through prior to completion in Q1 2024.

The data suggests that there is continued buyer caution. Of the sales that fell through in the first quarter, two-thirds were caused by the buyer changing their mind, pulling out after the survey, or unsuccessfully attempting to renegotiate a lower purchase price after the sale had been agreed.

Why did property sales fall through in Q1 2024?

Quick Move Now’s Danny Luke said: “Although our figures officially attribute a fifth of failed property sales to difficulty securing a mortgage, our research suggests that volatility within the mortgage industry is having a far greater impact on the quantity and success of property sales.

“Interest rate changes are continuing to have a big impact on buyer confidence. According to recent data, mortgage products are now typically available for just 15 days before being pulled. This is putting buyers under huge pressure to make quick decisions.

“Speculation that interest rates will fall has also led to caution amongst buyers. No one wants to ‘overpay’ now, to then find that they could have got a better deal if they’d held out another six months. Buyers are dipping their toes cautiously, but it doesn’t take much for them to be scared off.

“Higher interest rates mean budgets are already stretched beyond levels buyers are used to, which accounts for a high number of attempted renegotiations after the sale has been agreed. There is now much more expectation from buyers that they should receive a discount for any issues identified at the point of survey.

“A slower market also means chain break is impacting sale success. In a heated property market, chain breaks can quickly be resolved. In a slower, cooler market, it can take several months to find another buyer, which will often lead to the collapse of the entire property chain.

“Should the Bank of England lower their base rate in the coming months, as predicted, we could see higher levels of confidence returning to the market. Buyers and sellers have now become more used to the idea of higher interest rates but are still, understandably, keen to get the best deal they can.”

A separate study by Home sale Pack found that fall-throughs cost estate agents more than £60m a year.

The company analysed residential fall-through data from last year, provided by TwentyCI, and measured it against the estimated cost to the agent when they have to remarket a home they thought had already sold, thus gaining a good understanding of how much agents are out of pocket as a result of fall-throughs.

According to the data in 2023, there were an estimated 269,728 fall-throughs in the UK, representing a significant amount of time and money lost to the unpredictability of the home-selling process.

Each fall-through represents a loss in income from the commission an agent would have made on a sale. In a best-case scenario, the home will eventually sell, but a fall-through will mean a significant delay in revenue, while there is the possibility that other agents could be instructed owing to delays.

Home Sale Pack study assumes that the average estate agent charged 1.5% in 2023, meaning that the 269,728 transactions that did fall through equate to £1.2bn in lost or delayed earnings.

However, lost commission is not the only cost that agents incur due to fall-throughs.

When a sale falls through, agents often have to spend time relisting and remarketing a property. Once they have, there is also the cost incurred of conducting the viewing process all over again.

Home Sale Pack estimates that the average viewing costs an agent £23.35, based on the time each viewing takes out of their day, and the travel costs of getting to and from the appointment.

It also estimates that to sell a home requires an average of 10 viewings, which means total viewings costs hit an average of £233.43 per property.

Times this by the number of annual fall-throughs (269,728) and Home Sale Pack estimates that agents spent £63m in 2023 alone on conducting viewings for properties they thought they had already secured a buyer for.