While there is some improvement in the confidence of buyers and sellers in the property market, it has not quite fully recovered as the figures show that fall through rates remain 3% higher than two years ago (20% in Q3 2009).
Mark Montgomery, Commercial Director, 1st Property Lawyers said:
“The continued uncertainty of the housing market means many people remain unsure when it comes to buying or selling property. The good news, however, is that the levels of property transactions which do not go all the way through to completion is falling as the market starts to stabilise.
“While it is difficult to control every aspect of your sale or purchase, one thing that buyers and sellers can do is appoint a proactive conveyancer who is able to ensure the transaction goes through quickly and smoothly – leaving little room for people pulling out or getting cold feet.”
Reasons for Aborted Sales – Buyers
• The main reason buyers cite for their purchase falling through is the vendor pulling out of the transaction. This accounted for 25.7% of aborted sales for buyers in Q3 2011 and is down slightly on Q2 (28.3%). However it remains consistent with Q1 suggesting a continued wariness of vendors in the marketplace.
• The occurrence of buyers having issues with securing a suitable mortgage has been falling steadily since Q4 2010 (15.2%). This still represents 11.9% of the sales that fell through in Q3 but is lower than the 14.8% in Q1 and 14.1% in Q2 as mortgage availability increases.
• Other reasons for buyers failing to complete on transactions include family or personal reasons (11.4%), the property being repossessed (6.2%), the chain collapsing (5.5%) the buyer being gazumped (4.4%) or issues with the buyers employment (3.6%).
• The occurrence of buyers being gazumped has fallen significantly in the last quarter – in Q2 2011 this accounted for 9% of failed purchases whereas this has halved to just 4.4% in Q3. However this remains significantly higher than the same time last year when gazumping accounted for just 1.7% of aborted transactions by buyers.
Reasons for Aborted Sales – Sellers
• The key reason that transactions are aborted by sellers is simply that they change their mind or decide to pull out of the sale. In Q3 this accounted for more than three quarters (78.2%) of transactions cancelled by the seller. This is up 14% since the start of the year (Q1 2011 = 63.9%).
• Just 3.2% of vendors had to cancel selling their properties as they were repossessed in Q3 2011 – this number has been steadily falling since the start of the year – in Q1 repossessions accounted for 9.7% of aborted sales by vendors, and in Q2 the figure was 6.4%.
• The number of buyers pulling out of a sale has increased slightly this year – accounting for 2.8% of aborted sales in Q3 2010 compared to 3.1% in Q3 2011. This is up from a low of 1.8% in Q4 2010 as buyers remain cautious ahead of a possible double dip recession.
• Other reasons for vendors aborting sales of their properties in Q3 2011 include employment issues or a loss of job (2.7%), problems with the property title or leasehold (2.6%) and the chain collapsing (1.5%).
Have your say on this story using the comment section below