The number of property sales falling through has increased for the first time since the height of the pandemic market boom., the latest industry index on property fall throughs from House Buyer Bureau, has revealed.
House Buyer Bureau tracks the number of transaction fall throughs across the UK property market, what this means in terms of the average cost of a fall through and what the total cost to the property market is as a result.
The latest index shows that some 78,042 sales are estimated to have been subject to a fall through during the second quarter of this year.
This marks a 9% increase versus the previous quarter and the first quarterly increase since a market peak of 87,817 in the second quarter of last year, albeit the level of fall throughs seen in Q2 2022 remain 11% down annually versus the peak seen in Q2, 2021.
But while fall through volumes are still down on the previous market peak seen during the pandemic property market boom, the average cost of a fall through has climbed to a record high.
The latest figures show that the average fall through now costs those involved £3,209 per a transaction – a 2% increase on the previous quarter and a 9% annual jump.
As a result, the total cost of transaction fall throughs to the UK property market exceeded £250m in the second quarter of this year alone.
11.2% more than the first quarter of the year, with the total cost of fall throughs in 2022 so far alone hitting almost £476m.
In 2021, this total market cost hit over £1bn, the highest annual cost to the market in the last four years, with 2022 looking likely to come close, if not exceed this threshold.
Chris Hodgkinson, managing director of House Buyer Bureau, said: “Property sale fall throughs are simply an unfortunate reality of a property market that affords very little protection to buyers and sellers right up until a sale has actually completed.
“While it’s the buyer that often gets hit by the majority of the cost, both parties can see their hard earned cash go to waste due to a fall through, having paid out for costs such as conveyancing fees, with many sellers also hit if their own onward purchase is jeopardised.
“Unfortunately, we saw the level of fall throughs plaguing the market hit new highs during the manic frenzy of the pandemic property boom.
“This was largely down to an increased number of transactions in general, coupled with a market that was swamped with buyers fighting it out for limited stock, with the practice of gazumping becoming particularly prevalent.
“While the volume of fall throughs had been in slow decline, they’ve started to climb once again in 2022. We expect this upward trend to continue, but the driving factors behind this increase are likely to be very different in the current market,
“We’ve seen mortgage rates spiral in recent weeks and this increased cost will cause many buyers to get cold feet, having already agreed a sale but not contending with a far higher cost of borrowing.”
