Significant drop in number of property sales falling through before completion
Just under 25% of property sales fell through before completion in the second quarter of 2023, according to new figures from Quick Move Now.
Although many home buyers and sellers may be surprised that almost one-in-four property sales fails to reach completion, the figure is significantly lower than the 55.8% of property sales that fell through in the first quarter of this year.
Of the sales that failed in the second quarter, half fell through because the buyer changed their mind and withdrew. This is unsurprising considering the current level of economic uncertainty, rising interest rates, and worries about falling property prices. A further quarter fell through because the buyer was unable to get a mortgage, or because their mortgage product was withdrawn and replaced with a more expensive alternative. The remaining 25% of failed property sales were attributed to chain-break or the buyer withdrawing from the sale.
Danny Luke, Quick Move Now’s managing director, said: “The current fall through rate is the lowest we’ve seen in almost two years, which is good news for those hoping to buy or sell.
“With the level of economic uncertainty seen over the last 3 months, it’s little surprise that the most common reason for failed property sales during that period was the buyer changing their mind and pulling out of the sale. At the start of April, the best 2-year fixed mortgage deals sat at around 4%. Now, the average 2-year fix is around 6.5%. That rise of 2.5% means approximately an extra £150 per month for every £100,000 owing on a mortgage. For many would-be buyers, the extra interest costs have made the idea of moving impossible.
“Even would-be buyers who can afford to move are being cautious. Many are concerned about how high interest rates will go and what impact further rises will have on property prices. As a result, many are taking a ‘wait and see’ approach and delaying a move. Where property sales are going ahead, estate agents are doing everything they possibly can to keep chains together, knowing that a new sale is likely to be difficult and time-consuming to tie up.
“Those buyers who are still looking for properties are serious and committed. They’ve taken into account uncertainty around interest rates and property prices, and decided to proceed anyway. This means, in general, buyers are only making an offer on a property if they have a serious need to move and are committed to seeing the sale through to completion.”
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