Why has there been an increase in property transactions collapsing?
There has always been a risk when buying or selling a property. This risk increases if you are forming a part of a chain, whereby each link needs to be able to meet its requirements for everyone to buy or sell their property.
Whilst it has always been a risk, it seems that the chance of it happening over the past 12 months has seen a marked increase. It is thought that as many as one in three property transactions (totalling 34%) have fallen through over the past year.
Not only does this leave buyers and sellers feeling frustrated that they have been unable to process as they want along the property ladder, but there is also a chance of those in the chain being left with various costs associated with the collapse of the transaction. This includes surveys, local authority searches and also legal fees too.
Isn’t the property market growing?
It is a little surprising to learn that so many property sales are falling through when you consider how much of an increase there has been in the property market. The same report that presented the rise of property crashes has also shown that buying properties has increased by as much as 36% yearly.
Not only this, but when it comes to first-time buyers, those who are correct at the start of their property journey have increased by as much as 54% year on year.
So, why are properties crashing?
When you have so many people wanting to buy a house, be it a new home or a first home, it doesn’t seem to make much sense that so many of these sales are falling through. However, there are several reasons for this.
The first is the increase in demand itself; this has meant somewhat of a supply crunch. There are just enough properties for the number of people who want to buy them. Also, those available are seeing higher prices and more problems obtaining mortgages. Not exactly the best position to be in when buying any property.
Another reason this is happening is because of the cost of the living crisis we are now in. Those who have already prepared themselves to buy a home may now find that their wages will not be able to cover the amount they want to borrow. Not only this, but they may feel worried that they will not be able to afford it due to the issues with the cost of living, which results in them cancelling the purchase altogether.
One final thing that should be kept in mind when it comes to property transactions being cancelled is the time it takes for the process to be completed. In a post-Covid world, it seems that many critical processes related to buying or selling a property are taking much longer to complete. This has caused many property sales to fall because they take too long.
Whilst it may be more common for properties to fall through, this isn’t always the case. Lots of house sales go through, and the property market is still moving. It might take some extra time and money to get through the process and come out to the other side.
