Nearly one-third of housing sales fell through in the first half of this year, says a conveyancing firm.
1st Property Lawyers, a national conveyancing brand operated by My Home Move, said that 29% of sales collapsed, up from 21% two years ago.
The firm blamed the abolition of Home Information Packs as being one cause for the rise.
Mark Montgomery, commercial director at 1st Property Lawyers, said: “Sellers are now able to test the market without having to pay any upfront costs.”
As a result, he said, sellers felt less obligated to the sale.
He added: “Unfortunately, property transactions can and do fall through for a number of reasons.
“However, it is worrying that at a time when transactions are at an all-time low, the number of fall-throughs is increasing as nervousness in the market prevails.”
According to 1st Property Lawyers, 39% of deals collapsed because sellers took their homes off the market, many aborting the sales because they could not get the price they wanted.
A further 23% of deals fell through because buyers pulled out.
Many blamed concerns about falls in house prices, general economic uncertainty and job insecurity.
One in ten deals collapsed because the buyer could not get a mortgage.
Collapsed chains accounted for 9% of failed sales and poor surveys for 8%, while sellers deciding to let the property rather than sell it accounted for 6% of failed deals.
According to HMRC, there were 173,000 house sales in the UK in the first quarter, well down on the 459,000 in the last quarter of 2006 as the housing market neared its peak.
Montgomery said it was clear that more sellers are currently preferring to sit tight and watch how the situation develops.
Comments
@Mike Wilson,
No all time highs here mate – the mid nineties were the days for that – god I miss those days, there was tons for sale and I worked in suburban Home Counties towns and villages im not talking big old Northern Cities.
No, the stuff in big demand is 3 / 4 bed detached family homes, 3 bed semis in good spots fly out in days, really top end big stuff £1m plus here is money in the bank, had an open house thing the other day on a nice 5 bed in a lovely area and had over 40 people turn up. Trouble is I can’t only sell it once.
Flats on the other hand are pointless, my guys (and girl) don’t go out to some developments of flats now, the owners cant sell them for what they are worth and the investors will only pay rock bottom money
So, yes – lack of supply is the thing that’s stopping me making more money and the thing that’s keeping demand balanced but, it’s only certain properties we want more of.
Of course I don’t do national stats as Im not a national agent so it means nothing to my clients what new build flats in Leeds are doing to the national figures.
Jonnie
@jonnie
'Plus supply is what we all want – agents don’t have enough of the right stuff on their books '
Right stuff being houses that are not so highly priced no-one can afford them?
Seem to remember reading over the weekend that number of properties on agents' books is at an all time high - so 'lack of supply' is surely not the issue.
As this is a conveyancing firm, dont many of them have 'agreements' with corporates? I know when I was with a corporate we had to get vendors signed up with the conveyancer and the paperwork done when the property was marketed, thereby instructing the 'solicitor' before a sale was agreed. In which case their figures of people pulling off from the market because they cant get what they want makes slightly more sense.
Or am I going crazy?
SO "39% of deals collapsed because sellers took their homes off the market, many aborting the sales because they could not get the price they wanted."
Forgive me but if a sale was proceeding, which it must have been for it to fall through, did the vendor not get the price they wanted especially if it got to the solicitors stage which a vendor will rarely do if they are unsure on price (as we all know once we instruct the sol to do work the money clock usually starts a ticking)?
And what number is many in this claim out of the 39%? Is it 2%, 3% or 38%....... how MANY of the 39% were due to the vendor not getting the price they want? I reckon 1% to 3% maximum. Vendors rarely get past solicitor instruction stage if they are not happy with the price, unless I am working in a differnt world of EA altogether.
And to top it off they compare part of their findings to 2 years ago for some of this report and quote back to 2006 in another just to ensure the doom and gloom is there.......
Assuming this is only the stats from their company (sorry If I missed something) I would be questioning the 39% and wondering whether some of those counted in this figure aborted the sale because they could not get the next mortgage rather than it being as simple as they did not get the price they want.....we ask for feedback in this business, we should not always believe what we are told! as it would be easier for me to blame what the buyer is paying than admitting it is down to my own onward purchasing power!
Jesus there are some bored estate agents out there.
Here's one for you Pee Bee that I've barely seen quoted correctly.
Q4 2010, the economy contracted by 0.5%
Q1 2011, the economy grew by 0.5%
So, everyone is saying the economy is flat...
No, it's shrunk: 99.5 plus 0.5% equals 99.9975% of where we were in Q3 2010
; )
What didn't yet get about the following quote from the article by the way?
"...would-be sellers are now able to test the market for free. Buyers still won't (can't) pay the fantasy land prices sellers want. And sellers won't sell if their fantasies aren't fulfilled."
...and I even threw in a free typo...
I MUST spell check in future
I MUST spell check in future
I MUS...
;o)
rantnrave - there you go again!! You can't kid me, sunshine! I know how your analytics work, and I will use them in the same way you do...:
Start figure = 29%.
LESS CoL, RPI, HIV and FU2 since 1942; LESS seasonal agjustment (your old favourite...) -
End figure = 2.4% DECREASE.
RESULT!! A REDUCTION in fall-throughs on 2 years ago!!
See - told you HIPs were a washout... ;o)
Pee Bee - haven't you heard? With today's inflation, a quarter is now pushing 30%... ; )
rantnrave: I have read with... 'interest' Ms Webb's account of the situation.
Perhaps someone can explain these snippets to me: "They market their properties to see what kind of an inflated price they can get, and drop out at the last minute if they don't get it."
"...would-be sellers are now able to test the market for free. Buyers still won't (can't) pay the fantasy land prices sellers want. And sellers won't sell if their fantasies aren't fulfilled."
I repeat my previous comment directed to Brit1234. IF a property is floated on the market somewhere near Pluto, IT WILL NOT SELL. Therefore all this talk about vendor expectations is irrelevant, as no sale will be agreed which can then collapse!
Looking at the figures, of those sales which do unfortunately not proceed to exchange, buyer changing mind accounts for just short of a quarter (23%); buyer not getting funding another 15%; buyer pulling out after survey 8%; another buyer somewhere in the chain 8% (anyone spot an emerging pattern here??) - thus 54% due to BUYER releated problems. If the 'survey' can be believed, 39% was due to seller withdrawing due to not getting a big enough offer to accept (so how did it become a 'sale' in the first place I ask...?), then there are only SEVEN PERCENT of fall-throughs left to examine.
Would THIS be the "worrying" percentage that, were HIPs still with us, would not have fallen by the wayside? I fail to see why all of a sudden ALL vendor withdrawals are due to the cheapness of doing so. EVEN IF that were the case, it has apparently only risen by 8% post-HIPs. Again - nothing to write home about...
Lastly - when I went to school (and failed my Maths 'O'-Level...), a third was 33.33%; a quarter was 25%. Still - I suppose the media's chosen headline looks better than "twenty-nine hundredths of property sales collapse..."
Hey Ros you on hols? In the last 24 hours 2 major deals released, LMS selling out to LSL/Connells and Blundells selling out to Countrywide, and no mention on our EAt!??
Brit1234: "The problem is that certain sellers are unrealistic with their prices believing their home is worth the same as in the peak of the housing bubble."
Your complete lack of understanding shines beacon-like, Brit. These are AGREED SALES the article refers to. This means that the BUYERS agreed a price with a SELLER.
If your reasoning was so correct, and sellers were so unrealistic as to make the properties unsaleable, than FALL-THROUGHS would not occur, would they?
I know it's hard for you to accept - but the housing market is still operating despite your best efforts. People still LOOK to buy. People still BUY. Might not suit your agenda - but you are just going to have to face up to it.
But... what else can we expect from a one-trick pony like you? One argument does NOT cover every complexity of the housing market, Brit. Time to wake up to that fact, I suggest.
Of course, you CAN if you prefer just keep jigging around to the same old record playing in the background and one day - just one day - you will dance like Fred Astaire. Maybe.
(just don't make too much noise doing it in your rented pad or the Landlord will threaten to evict you...)
Alright,
Its spun into an EA v’s HPC house price debate which is fine as there are links to supply and demand and all that stuff but in an attempt to get back to the story this one feels a lot like a press release from a business that made many millions from HIPs but this ‘suck it and see’ thing is the point here.
Zero cost of entry to the world of selling isn’t a bad thing – if some one wants to take a punt on selling to get a particular house they’ve seen or because Mr & Mrs house seller are going their own ways or they get a chance at buying a business then that’s a good thing – I agree some of them will loose the one and only house they wanted, some will decide they actually do like each other and get back together and others will miss out on the west country post office they wanted to buy, but, many will actually move…………and even people like old Brit1234 might find what they want and stop flirting with various lenders and agents in a permanent state of ‘ill buy in a minute’
Plus supply is what we all want – agents don’t have enough of the right stuff on their books (who’s stopped taking flats on unless they are giveaway and 2.5%?) and the buyers want lower prices / more supply (they come as a double act)
Jonnie
@Alun Protheroe
"Two things are keeping the market stagnant(outside London) - Lack of mortagge finance and ajaob insecuirty."
So, nothing to do with how high house prices are then?
Or, is this not a factor because you think, somehow, house prices are set in stone and cannot fall? No matter how many people cannot afford them.
Would you accept that the housing market, by definition, needs a constant supply of 'new blood'? And, at the moment, very few young people can afford to enter the market because they cannot AFFORD to - even at the lowest mortgage rates for generations.
The only way the housing market can be sustained in the medium term - in my area of the South East - is if (over the course of time) young people are prepared and able to service a mortgage of about 300k. I know quite a few young(ish) people with a mortgage that size. Most of them have no idea how they will ever repay the capital - they've bought into the daft notion that credit is infinite and succeeding generations will always be able to take on so much debt that they will be able to repay their capital. We are, of course, at the end game of that particular scenario.
books in order Brit? what are you waffling on about? I don't intend to have an argument on a topic that I deal with every day and you just assume. AIP's are ten a penny. Good luck with the underwriters.
Wardy what's wrong with lending then?
I have been offered mortgages no problem, you just need to get your books in order.
I see people blaming lending all the time where in reality it is over priced housing.
Lending is fine. The banks are choosing the best customers as they have limited money to lend. If you have a big deposit, good credit rating and steady job you are a safe bet for them and will have no problem getting a mortgage.
Banks don't want low deposits because house prices are over valued and it would put the bank at higher risk.
Any in the trade know all the reasons a sale falls though, this is just stealth marketing from a loss making company in PR form, bad PR I would say, but thats their call.
How many delayed sales are down to poor solicitor performance? Loads.
This just does not make sense. Sales fell through says this firm because vendors could not get what they wanted. If the sale was proceeding surely they got what they wanted. The buyers may not have got what they wanted in terms of finance but that is not caused by removing HIPS from the equation.
To say that vendors can test the market without up front costs is simply not so as there is the EPC that is needed and this is not free.
This bloke obviously should be in the same camp as Grant Schapps.
To say that HIPS is the cause of abortive’s is just not so, is a terminological inexactitude, disingenuous, and above all a lie but then this is a firm of those closest to these matters. Us EA's on the other hand have an act of Parliament that says we are unable to lie and we must tell the truth.
In conclusion this is another lawyer talking about what he knows little of and for the future should keep his mouth shut.
Brit1234 'Lending is fine. You just need to have a deposit, a steady job and good credit record.'
Sorry, not the case.
blaming hips for this is a joke, the market is on the verge of a second collapse requiring 2008 style heroics from the BOE (more QE please Merv and reduce rates to 0.1%), thus people are more nervous and pull out of deals..
Lending is fine. You just need to have a deposit, a steady job and good credit record.
The problem is that certain sellers are unrealistic with their prices believing their home is worth the same as in the peak of the housing bubble. Some had such little deposit back then that they can't sell for less as they are in negative equity.
I think we have to just accept some people will be trapped in their homes whilst the market moves round the rest.
At the end of the day property sales fall through for a number of reasons. Whilst HIPS may have made a difference to some (preventing them falling through) I dont think that this fall through rate is just due to HIPs being abolished.
Here's a link to an article by Merryn Somerset Webb in MoneyWeek which looks at the figure of 29% collpased sales and questions how many houses in the UK are really for sale.
http://www.moneyweek.com/blog/there-are-fewer-homes-for-sale-in-britain-than-you-think-12901
Meanwhile, Mr. Pryor in his latest musings, offers a different angle as to why sales have collapsed:
http://web.me.com/henry.pryor/Housing_Expert/Comment/Entries/2011/7/18_What%E2%80%99s_blocking_the_housing_market.html
Good enough reason to not use mwm perhaps?
If they really believe their own PR and payment helps from a Vendor, why do they not take part payment of their servcies at the outset?
"According to 1st Property Lawyers, 39% of deals collapsed because sellers took their homes off the market, many aborting the sales because they could not get the price they wanted." How was it a 'deal' if they didn't get the price they wanted. Or, did the price change AFTER the deal was agreed? IE, did the buyer come back and renegotiate and got told where to go? Bad sales have nothing to do with price. Agents forced into accepting offers from rubbish buyers due to market conditions? Any good agent knows a bad buyer. Have we simply lost some quality control. Where are you now, Gordon Brown?
Why would anyone be surprised by this article? There is virtually nothing new in it. The 1998 pre-HIPs consultation paper research showed that about 28% of accepted offers failed to complete. At least there is consistency in this appalling statistic. It's always been around a third. So it's not been made worse by funding problems; those problems will usually (though not always) arise before you get to offer acceptance.
Of course HIPs were not around for long enough to tell whether this statistic would fall & their brief life coincided with the crash in the market. And most people scoffed at them & ignored their potential usefulness because they couldn't see beyond the rubbish implementation.
So 13 years on & we see the same old complaints about the failings of the process between offer acceptance & exchange of contracts. If HIPs has been fully & properly implemented & treated pro-actively, they would, without a shadow of doubt, have reduced that window within which things can go wrong.
It should be a universally accepted concept that everything that might raise issues (legal & condition-related) is put in place when marketing commenced & that buyers get their ability to buy verified before making offers. That would drastically reduce the uncertainty & unnecessary delays that can so often lead to frustrations & suspicions that go on to cause chains to collapse & the consequent heartache, disappointment & financial loss.
But no-one who thought the HIP concept was a waste of time should complain about the high level of fall-throughs. The fact is they were never given a proper chance because they were not implemented in the full sense, which was an essential pre-requisite to make them any use. And the reasons they were not implemented? Vested interests, misinformation, apathy, intransigence & ignorance. Apart from being ahead of the game when it came to search procurement, it had nothing to do with the mechanics of the system.
Anyone come up with a better idea yet? I think not.
Very difficult to pay over the odds for a property if you are buying with a mortgage, your bank/surveyor wont let you.
Overpricing is a misnomer. If a property is obviously overpriced a buyer with a sizeable mortgage in tow simply can't buy it. If such a property (overpriced) gets to 'sale agreed' and sols instructed, this is where the fall through will come from. A good agent would advise of this potential problem prior to such a situation developing.
Overpricing is folly for this reason, but some owners insist it is done.
Potential buyers who have mortgages should relax, they can't overpay.
Whichever angle you view the stagnant market it points at banks for that larger part of the buying market who need a mortgage to either enter the market or move up the ladder. If the buyers are not thwarted at valuation with an 'undervaluation', it will be LTV (Woolwich this morning 'A market leading 2 year Fixed rate at 70% LTV, which has been cut by 0.24% to 2.54%'). 30% deposit Woolwich!! COME ON !! or onerous application process, digging into your great aunts debt of 20p to Green Shield Stamps in 1954.
Banks are the problem
If it was me, I would be keeping a quite about a 29% abortive rate and certainly not trying to pass the fall through rate off on something as insignificant as HIP's.
An excuse and nothing more.
I wonder how many of these sales could have been saved with a bit of good old fashion communication. From an estate agents point of view a huge majority of abortive sales can be attributed squarely at incompetent solicitors.
Sorry Nick, but if, as you say, they are being obtained by the purchaser, rather than being provided by the vendor, then the whole equation has completly changed.
There was and still is a lot of tripe spouted about Hips.
They are still being produced although they are now purchased by the house buyer rather than the house seller and they are not called Hips. Even first time buyers have to buy them now which they didn’t before. We were a Hip producer and loaded them onto Hipview.com for any authorised person, buyer, solicitor, estate agent, to view, down load or print. We still have solicitors contacting us for the pin numbers of Hips even fourteen months after the abolition as the information they contain is still valid It made sense to provide the info up front for transparency and not when a sale has been agreed and little surprises can change the situation. £250 ? Bargain.
@ Industry Observer....
Sellers didnt want HIPS as they cost money to buy, Purchasers solicitors wouldnt use HIPS provided as they had been compiled by the Vendor and were mainly out of date by the time a sale had been agreed.
Buyers never asked to see a copy.
The HIP, far from simplifying the sales process actually duplicated work.
As already stated the only people who wanted HIP`s were the HIP providers who charged for this product.
HIP`s were a good idea but in reality unworkable in the real market.
Hips were less that £300 unless you were daft enough to buy onr from an estate agent. If there was an up front cost of this amount to put your house on the market then you would probabaly be seriously trying to sell it. Therefore the number of fall throughs would be less. You would probably feel mor obliged to sell.
Nick.
This conclusion is nonsense! Yes a lot of sales are falling through and the main reason is mortgage lenders refusing to lend. They give buyers an agreement in principle but when the buyer then finds a property, based on what the banks have told him/her they can borrow, it is sent to the mortgage underwriters who seem to look for any excuse, no matter how trivial, not to lend. Until the bankers stop stuffing the pockets with fat bonuses and start lending to the ordinary man on the street the housing market will not recover. Unfortuantely this (and previous) governments seem to have no appetite for forcing the banks to change.
JC - You hit the nail on the head in your opening sentence. The current stand off is all about affordability.
I was disappointed though that you then linked that solely to lenders without mentioning high prices. Personally, I can't understand why so many people think greater lending is the answer. The amount of credit thrown at the housing market in the build up to 2007 is directly related to the economic mess this country is now in. The banks aren't in a hurry to return to that madness and increased regulation is (thankfully) preventing them.
I can understand why EAs might long for the days when prices and transactions were rocketing and somehow fees kept coming in, bigger bonuses were paid out etc. Those days are long gone. It was completely unsustainable.
The cheap credit to sustain most of today's aspirational asking prices just isn't there. Anyone who expects that it is going to return is, in my opinion, as deluded as those vendors.
Not an expert on this and as a lettings specialist more worried about EPCs!!
However just one comment/question:-
Is anyone aware of anyone else who did not like or want HIPs other than estate agents who then influenced vendors to think the same way?
I have still never seen any adverse comment on HIPs from any other parties. I would have thought getting only serious vendors properties on the market as opposed to the "let's float it and see what happens" brigade would benefit the market.
On that I agree with anonymous Coward
And I suggest read also the surveyor's comment in the next item on what people expect house prices to do
What a load of dribble...HIPS was an ill thought out and unworkable idea and was not wanted by anyone...other than the HIP providers.
Property sales, along with car sales, are a good indicator of a countrys economy and surprie surprise both are stagnant...just likeour economy.
The property slump in the UK is a worldwide property slump...so HIPS have no part in this discussion.
The only things which will stimulate property sales will be economic growth, job security, banks lending to buyers i.e. not making it so hard to borrow money and finally property prices to remain at sensible levels. The only solution is time...maybe another 5-10 years!
The chap qouted sounds like he used to have a HIPS business !
HIPS was aload of bearaucratic New Labour nonsense. Does he REALLY belive that someone would take , for example, a £40k hit on their envisaged selling price because they ahd been forced to commit to £500 on a HIPS pack ?
Two things are keeping the market stagnant(outside London) - Lack of mortagge finance and ajaob insecuirty.
Hips? don't be silly !
Just because My Home Move suffered a high fall through rate, lets not jump to the conclusion that their market segment is a fair representation of the entire market.
Budget conveyancing is a good thing, but it might attract a certain kind of client looking for everything on the cheap and this might contribute to the 29% fall through rate.
Our fall through rate is nothing like that and I'm sure many agents haven't seen any such increase in abortive sales.
It is important to consider the data source before assuming it is an indication of a market trend. You wouldn't interview diners at MacDonalds and then apply their behaviour to all UK restaurants would you?
So keep this data in prespective and don;t see it as a reason for lamenting the loss of the dreaded HIPs!
Maybe it shows us another trend, that people who want everything cheap are unreliable and don't keep their agreements. Buy cheap = behave cheap. What do you think?
Testing the market (at the moment) usually means putting a property on the market for WAY too much money which means that a sale is never agreed and solicitors are never involved.
I loved HIPs for putting a stop to that.
That was fab.
But not having them has nothing to do with SALES falling thru.
There is obviously a massive crisis in the private housing market, and something urgently needs to be done.
The Government have elected to suspend HIPs as a cheap way to try and stimulate the market but this definitely has not worked.
The question is. What are they going to do to FIX this badly wounded market and when?
The application of simple economic policy is all that is needed.
If the housing market continues to stagnate, it will affect the Nation's economic recovery and, it will happen - on their watch.
The clock is loudly ticking.
I am sorry but the conclusion contained in the title of this article is complete nonsense. We are certainly seeing the effect but almost all of it is related to affordability.
There is a stand off in the market between buyers and sellers which is not going to go away until the market starts to rise and that is only going to happen when the lenders start to become more realistic.
e.g. A professionally qualified buyer recently had approval in principle but when it came to the crunch the lender decided that although the current income was sufficient it was less than last year and that was less than the year before. They then drew a straight line projection and said that in 2 years time he would be unable to afford the mortgage. The fact that he was in a profession related to the property industry which might just improve and that he had been going through a divorce, again from which his life prospects might now improve, was seen as irrelevant.
The fall throughs currently seen have everything to do with the lenders and lack of market confidence. Absolutely nothing to do with HIPs.
@Antony; Obligated IS a perfectly good English word. However, it's probably used out of context here. I can't see that a £300 - £500 HIP cost would 'obligate' anyone!
What does "obligated" mean? Why use an Americanism when there are perfectly good and far less ugly phrases available in British English?