Some improvement in confidence of buyers and sellers in property market
The number of residential property transactions in the UK that fall through before completion has fallen 8% in the last year according to new figures released today by leading conveyancing lawyers.
Some 23% of property sales were aborted in the third quarter of 2011, the same as in the second quarter of the year however this figure is 8% lower than a year ago when 31% were aborted and 12% lower than the peak of 35% in the final quarter of 2010, figures from 1st Property Lawyers show.
While there is some improvement in the confidence of buyers and sellers in the property market, it has not quite fully recovered as the figures show that fall through rates remain 3% higher than two years ago.
‘The continued uncertainty of the housing market means many people remain unsure when it comes to buying or selling property. The good news, however, is that the levels of property transactions which do not go all the way through to completion is falling as the market starts to stabilise,’ said Mark Montgomery, commercial director at 1st Property Lawyers.
‘While it is difficult to control every aspect of your sale or purchase, one thing that buyers and sellers can do is appoint a proactive conveyancer who is able to ensure the transaction goes through quickly and smoothly, leaving little room for people pulling out or getting cold feet,’ he added.
The main reason buyers cite for their purchase falling through is the vendor pulling out of the transaction. This accounted for 25.7% of aborted sales for buyers in the third quarter of 2011 and is down slightly on the previous quarter which was 28.3%. However it remains consistent with the first quarter, suggesting a continued wariness of vendors in the marketplace.
The occurrence of buyers having issues with securing a suitable mortgage has been falling steadily since the end of 2010. Some 11.9% of the sales that fell through did so for this reason in quarter three.
Other reasons for buyers failing to complete on transactions include family or personal reasons 11.4%, the property being repossessed, 6.2%, the chain collapsing, 5.5%, the buyer being gazumped, 4.4%, and issues with the buyer’s employment, 3.6%.
The key reason that transactions are aborted by sellers is simply that they change their mind or decide to pull out of the sale. In the third quarter this accounted for more than three quarters, 78.2% of transactions cancelled by the seller. This is up 14% since the start of the year.
Just 3.2% of vendors had to cancel selling their properties as they were repossessed in the third quarter and this number has been steadily falling since the start of the year. In the first quarter repossessions accounted for 9.7% of aborted sales by vendors, and in the second quarter it was 6.4%.
Other reasons for vendors aborting sales of their properties in the third quarter included employment issues or a loss of job, 2.7%, problems with the property title or leasehold, 2.6%, and the chain collapsing, 1.5%.