With so much demand for homes, you would imagine buyers would be keen to conclude the deal as quickly as possible. However, a recent study indicates 32% of property deals fell through between January and March of this year.
A quarter of the transactions which collapsed did so because the buyer was unable to arrange finance.
It is vital that buyers and vendors aware of mortgage lenders tightening their criteria when it comes to offering mortgages. These are challenging times financially, and it is no surprise to see lenders acting in this manner.
The managing director of the company behind the study, Danny Luke, said; “Property prices have been climbing and climbing in recent months. At the same time, the UK has been experiencing a steep rise in inflation and lots of people are beginning to really feel the pinch from steep rises in the cost of living. It was inevitable that the squeeze on people’s wallets would begin to be reflected in mortgage companies’ affordability assessments. From our conversations with potential buyers and estate agents, it is clear that lenders are being more cautious about which properties they’re prepared to lend on and how much home buyers can afford to borrow in light of rising day-to-day living costs. Energy prices have already risen by 50% for most UK households, and they look set to increase even further through the latter half of this year and into 2023. That, of course, has a significant impact on homeowner affordability.”
There are many reasons why property deals collapse
While a more cautious approach by lenders is a significant factor in collapsed property deals, it would be wrong to suggest this is the only factor. Other reasons for failed property sales in the first quarter of this year included:
- 34% of failed sales were down to the buyer changed their mind about the purchase
- 25% of failed sales occurred because the seller stopped the deal, citing slow progress
- 8% of failed sales are attributed to the buyer looking to renegotiate on the previously agreed sales price
- 8% of failed sales are down to a change in the buyers’ circumstances
We can help you better manage the sales process
Danny also said; “The property market has defied many predictions over the last two years, remaining buoyant and thriving despite challenging external conditions. Demand has remained strong since the end of the stamp duty holiday, and a shortage of properties coming to the market has led to exponential house price growth. However, both buyers and sellers are beginning to show more caution. Steeply rising living costs and worries about future financial security will undoubtedly impact buyer confidence.”
Danny continued by saying; “It’s little surprise that 34% of failed sales are attributed to the buyer changing their mind about a property after agreeing on a sale. There is such stiff competition for properties at the moment, that it’s easy for buyers to be pressurised into agreeing to a higher purchase price than they’re comfortable with, in order to secure a property. A few weeks in, when the sale really begins progressing, it’s understandable that buyers might start to get cold feet about the agreed sale price – which accounts for 8% of failed sales – or pull out of the purchase altogether.”
Contact Williams of Petersfield for all your 2022 housing market needs
At Williams of Petersfield, we aim to support the Petersfield community as much as we can, and we know this is an extremely trying time. A lot of people are looking for support and guidance, and if you have any property or housing related questions, we are more than happy to assist you, so contact us today.