We all know that moving house is one of the most stressful things you can do, but having a sale fall through is guaranteed to leave you tearing your hair out. Unfortunately the likelihood of a chink in your property chain is set to increase, as the volatile housing market leaves buyers with cold feet.
Worryingly, sellers now face a one in two chance of their sale falling through, according to research from property firm Quickmovenow.com. A quick glance at the company’s recent Fall Through Index (FTI) report shows that the rate at which deals have collapsed has doubled since its records began in 2006.
Not surprisingly, the company blames the current market conditions, for these failings.
Hywel Luke, managing director of Quickmovenow, says: “This gives us a real indication of how market conditions are affecting home owners looking to sell their property and, as with most market indicators, the FTI outlook for the near future is poor.”
It seems that many buyers have lost confidence in the market, so when negative stories hit the news it’s not uncommon for them to get itchy feet and pull out of the transaction. Others are unable to secure the mortgage they were initially offered and only have access to more expensive options.
“Back in 2006 and early 2007 the market was extremely competitive,” says Luke. “Buyers would do anything to secure a property and were able to stretch mortgagees to the limit as well as get easy access to temporary bridging finance. Since August 2007, the market has hardened, which has led to sales taking longer to agree and an increasing ratio of collapsed chains.”
On top of this, buyers with even slightly dubious financial backgrounds are now falling foul of more stringent underwriting by lenders. In these troubled times, surveyors working on behalf of lenders are being extremely cautious and, as a result, valuations are often well below the expectations of the buyer, vendor and estate agent, so reducing the amount lenders are prepared to put up.
If this wasn’t enough to scupper your chances of buying or selling a home, most sales involve a chain of interdependent transactions. Consequently, this multiplies the chances of something going wrong, as problems anywhere in the chain can block four or five dependent moves. If the unreliability of the house purchase chain has always been a huge stress for buyers and sellers alike, this is even more the case in the current market conditions.
“For many sellers, missed completions often result in onward purchases being lost. Sellers will also lose out financially, with money sunk into solicitors, estate agents, a home information pack (HIP), survey and mortgage fees, often in excess of Â£2,000. They will also remain exposed to the changing market conditions, which, as it stands, could see their house price fall as they may have to wait a further three to nine months to secure another buyer,” says Luke.
No one can predict what the future will hold, but right now the outlook for home buyers and sellers on all levels of the housing ladder seems challenging, to say the least.