With recession confirmed and house price falls predicted next year by up to 9% according to the latest OBR report, property transaction levels remain remarkably high, according to the latest edition of the Conveyancing Market Tracker (CMT) from Search Acumen.
The property data and technology provider found that average quarterly transaction volumes in Q3 2022 were the highest recorded in five years when discounting Q1 2022 which witnessed an unprecedented administrative backlog of lockdown cases completing.
This steady pattern of sales growth can also be seen in an 8% transactional increase from Q2, and a substantial 32% increase from the same period pre-pandemic in 2019.
This meant the average conveyancing firms’ quarterly caseload has risen from 70 in Q3 2021, to 80 in Q3 2022, equating to a significant 15% increase.
According to Search Acumen’s analysis, this comes at a time when the market has seen a marginal increase in the number of active firms, rising by just 0.7% in the same period, suggesting that already busy property solicitors are now even busier.
The Market Tracker – which monitors business activity and competitive pressures in the conveyancing market – shows that the volume of active firms in the market is yet to recover to anywhere near the peak of 4,191 in 2017, compared to 4,051 now, and remains 11% down from a decade ago.
Andy Sommerville, director of Search Acumen, said: “The pressure we are seeing on conveyancing firms up and down the country feels continuous after the peak seen in Q1 of this year following market lockdown, with little respite ever since.
“We know from this data that the size of the conveyancing sector has not kept pace with transactional growth, which inevitably means frustrating delays for consumers and stakeholders alike, especially when you consider the digital switch happening at Land Registry which comes with its own teething issues.
“Mortgage fall-throughs are a big concern as buyers try to beat the tide on increasing interest rates, whilst the three G’s are back in force: gazundering, gazumping, and gazanging.
“Around 20% of all residential transactions fall-through pre-completion on a normal basis, but the industry is generally accepting that this figure will rise sharply in line with increased market uncertainty. It’s already taking buyers over double the time to get to completion than it did pre-pandemic, and the longer this time is stretched out, the more vulnerable the entire property market is as recession beds in.
“This comes at a time when the Autumn Statement has confirmed austerity 2.0, where a new focus on public sector efficiency is likely to translate to cutbacks. Less room for investment in key departments that support the real estate markets could see our protracted transactions times get longer. There are significant delays already in processing property transactions and it is hard to see how a cost efficiency drive won’t exacerbate the problem, especially at Land Registry where staff are planning strike action, and for over-stretched local councils.
“This might seem abstract, but delays and transaction failures cause significant blockages, costing businesses, buyers, and sellers huge sums of money at a time when they can least afford it. While the government may be able to support industry by tackling inflation and stabilising interest rates, this will be negated if the market grinds to a halt beneath the surface.”
