Property expert Danny Luke, from Quick Move Now, says that tracking property sale fall through statistics can offer an interesting insight into the health of the property market and the impact of external factors.
Danny explains: “In the third quarter of 2021, just 11% of property sales fell through before completion. This figure was significantly lower than usual and can be attributed to strong demand and a shortage of properties on the market. Buyers were keen to push their purchase through before the end of the stamp duty holiday and were also acutely aware that, should the sale fall through, their options for other properties would be incredibly limited.
“In the final quarter of 2021, the fall through rate returned to a far more usual figure of 34%. I would suggest that this indicates that the market is settling down and returning to more familiar conditions, albeit at lower volumes than we have previously experienced.”
The reasons for failed sales also offer an interesting insight into the mood of the market and the psychology of both buyers and sellers.
Of the sales that failed in the final quarter of last year, 50% were attributed to the buyer changing their mind or attempting to renegotiate their offer at the last minute. Danny suggests that this is due to the high-pressure market.
He says: “The competition for properties was well documented last year and, as such, buyers felt under significant pressure to make an attractive offer in a very quick timescale if they wanted any chance of securing the property. Buyers had little option but to be impulsive with their offers.
“Once the adrenaline and excitement of competing to get their offer accepted subsided, the pressure eased a bit and buyers had the chance to think more rationally about their purchase. Was this really the property for them? Was it really worth the price they had agreed?”
It seems any would-be buyers who weren't keen to play the property game were often pushed aside by those who were, as a further 28% of failed sales were down to gazumping (where the seller pulls out of the sale after a higher offer comes in) or because the seller felt the sale wasn't progressing quickly enough and sold to another buyer.
Danny adds: “One of our properties had 62 potential buyers book in to view it in its first week on the market. We received a total of 22 offers, including three blind offers from buyers who hadn't had a chance to view the property in person. The sale was quickly tied up at £10,000 above the asking price, but two weeks later the buyer got cold feet and asked to renegotiate the agreed sale price. The strength of interest in the property meant we chose to put it back on the market, where we quickly agreed a new sale, again at £10,000 above the original asking price.”
Annually, the fall through figures communicates a very similar message. Throughout the whole of 2021, we saw 30% of property sales fail before completion. 39% of those failed sales were attributed to the buyer changing their mind or trying to renegotiate their offer after the sale had been agreed.
Danny concluded: “2021 was a very high-pressured year for the property market. Demand far outstripped supply and things were moving at an exceptional speed as buyers and sellers raced to beat the stamp duty holiday deadline.
“The reasons for failed sales offer a clear narrative of buyers under pressure who, in the cold light of day, questioned the wisdom of their purchase and the price they were required to pay to secure a property, alongside a buoyant market that had an abundance of buyers ready to step in should you be unwilling or unable to complete the purchase quickly and for top price.
“The continued shortage of properties for sale means that prices aren't likely to fall drastically any time soon, but we have already started to see a slight cooling and calming of the market. Until there is a greater level of stock available, those without a strong need to move are likely to hold tight until they have a greater number of options, so I would expect sale volumes to stay fairly low, certainly for the first half of the year.”