Sellers pulling out after failing to get the price they wanted contribute to 29% of transactions being abandoned
Almost one in three house sales collapsed in the first six months of 2011, according to data from the UK's largest conveyancer 1st Property Lawyers. The firm said the rising number of sales falling through was due to buyers and sellers getting cold feet, the elimination of Home Information Packs and economic uncertainty.
The 29% of abandoned transactions were chiefly the result of sellers withdrawing properties from the market (39% of the sales that fell through), with the elimination of Hips another major factor. Now a Hip is no longer a requirement, the cost of selling has fallen by �500, making it less of a financial burden to pull out of a transaction. This means less serious sellers can put a property on the market without suffering serious losses if they fail to get the price they are hoping for.
HM Revenue & Customs figures show that there were 173,000 house sales in the UK in the first three months of the year, well down on the 459,000 recorded in the last quarter of 2006 when the housing market was nearing its peak.
Buyers pulling out of the purchase is the second most common reason (23%) for abandoned sales, driven by nervousness in the marketplace about house prices and fuelled by fears over finances, general economic uncertainty and job security.
On a more positive note, fewer purchases were dropped because buyers failed to secure a mortgage. Just one in 10 collapsed sales this year were caused by difficulties gettinng a home loan ? down half from 15% in 2009 ? as people have shifted their expectations around mortgage finance and know they need to get mortgage finance in place before house-hunting.
Sales have also fallen through because of a chain collapsing (9% of failed transactions), unfavourable surveys (8%) and sellers withdrawing properties for sale and deciding to rent them instead (6%).
Mark Montgomery, the 1st Property Lawyers commercial director, said: "A lot of this is about temporary changes to perspective and circumstance; where people have started a process, decided to sit tight for a bit, before eventually coming back to the market."
He said that real world factors of family sizes, schooling and personal circumstance drive the market, causing more sellers to sit tight and watch how the situation develops.
"Expectations have not always been met," he added. "Modest price rises after the initial post-credit crisis fall had raised the hopes of property-owners regarding what they might get on the market. This unrealistic idea of property values was reflected in the number of sellers aborting transactions once they realised they wouldn't be getting what they wanted."
Just 3% of buyers withdrew their offer, according to 1st Property, while the same percentage of sellers said they had been gazundered, when buyers replace their original bid with a lower offer at the last minute ? the opposite of the gazumping that took place when house prices were rising.
Source: http://www.guardian.co.uk/money/2011/jul/15/one-three-house-sales-collapse
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