The number of transactions progressing to completion is being hit by the cost of living crisis and rising interest rates, new figures claims.
Analysis by property data company the Landmark Information Group shows that although the market is stabilising across most of the transaction pipeline, transactions are elongating between the Sold Subject To Contract (SSTC) and completion stage, which is adding to the nerves of buyers and mortgage lenders.
Its latest Property Trends report for the second quarter of 2022 shows most of the transaction pipeline is working well, with listings, SSTC and searches not deviating by more than 5% month on month, compared to the more normal year of 2019.
This contrasts with the first quarter where the market was more unstable, fluctuating by up to 18% within the quarter.
However, the number of transactions progressing to completion is down 11% on the second quarter of 2019 and 7% on average compared to the first three months of 2022 as buyer confidence is increasingly hit by cost-of-living pressures and increasing interest rates.
This confidence is being further hampered by long transaction times and expired mortgage offers, the report said.
The average transaction time has grown by 27 days from 91 in the first half of 2019 to 118 days.
Landmark’s data also shows that the ratio of valuations per offer has risen by 15% in the first five months of 2022, compared with the same period in 2019, indicating that false starts are now on the rise.
Sellers are, in the meantime, increasingly emboldened by rising property prices as they seek the best offer possible to fund their onward purchase. This is further contributing to the elongation of chains dragging out, Landmark said.
Simon Brown, chief executive of Landmark Information Group, said: ‘Whilst the property market is stable across much of the transaction chain, we are starting to see the friction between buyer hesitancy and seller bullishness on price being played out in completion rates – already struggling due to inefficiencies and disconnects across the transaction process.
“With buyers increasingly mindful of cost-of-living pressures and higher interest rates, there needs to be stronger confidence in the transaction process itself. Home-movers have to be able to trust that a transaction will run smoothly – at the moment the fragility of the system creates real risk of chain collapse for those wanting to move within a reasonable timeframe’.