The first quarter of 2024 has seen the UK housing market hit a stumbling block, with nearly one-third of all property sales not making it past the finish line. This trend is causing headaches for potential buyers and sellers and is also punching a hefty £60m hole in estate agents’ pockets annually.
According to fresh data from Quick Move Now, a worrying 31.3% of residential property sales fell through before completion in the initial three months of 2024. The primary culprits? Buyer hesitation and financial hurdles. Two-thirds of these failed transactions were due to buyers getting cold feet, trying (and failing) to renegotiate the sale price, or pulling out after unfavorable survey results.
Here’s a breakdown of why sales are collapsing:
- Buyer’s Remorse or Price Haggling: 47%
- Mortgage Miseries: 20%
- Survey Scare-Offs: 19%
- Chain Reaction Breakdowns: 8%
- Gazumping Jumps: 6%
Danny Luke from Quick Move Now commented, “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.”
The Costly Consequence for Estate Agents
It’s not just buyers and sellers who are feeling the pinch. A separate investigation by Home Sale Pack reveals that the estate agency sector is bleeding more than £60 million a year due to these fall-throughs. In 2023 alone, an estimated 269,728 property sales didn’t go through, translating to a massive loss in commission and additional costs for agents forced to restart the marketing process.
The research points out that each unsold property not only delays potential earnings but also opens the door for sellers to switch to competing agents, further amplifying the financial sting.
On average, an estate agent charges a commission of 1.5%, meaning last year’s failed sales equated to a staggering £1.2 billion in lost or postponed revenue. And that’s before factoring in the cost of viewings. With each viewing setting an agent back by £23.35 and an average of 10 viewings needed per sale, the total viewing expenses hit around £63 million in 2023.
A Glimmer of Hope?
Despite the current climate of uncertainty and financial losses, there’s a silver lining. Predictions of a potential drop in the Bank of England’s base rate could see confidence returning to the market. Both buyers and sellers are slowly adapting to the new normal of higher interest rates but remain eager for the best deal possible.