Nearly a third of house sales collapsed in the first six months of 2011 as nervous buyers and sellers pulled out of deals, according to a new report from a leading firm of property lawyers.
29% of deals fell through in the first half of 2011 – up from 21% in 2009.
The figures highlight the fragile state of the UK housing market and the reluctance of many would-be buyers to splash out in uncertain economic times.
Mark Montgomery, commercial director at 1st Property Lawyers, the firm behind the report, said: “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 through’s are increasing as nervousness in the market prevails.”
The housing market collapsed in the wake of the financial crisis and recession amid high unemployment, a shortage of mortgages, and the need for a large deposit.
First-time buyers (FTB’s) have been particularly hard hit with banks demanding chunky deposits in exchange for a home loan.
UK Government figures show that 173,000 houses were sold in the first three months of the year – well down on the 459,000 sold in the last quarter of 2006 as the UK housing market reached its peak.
The Property report said
• 39% of transactions collapsed because sellers took their homes off the market.
• 23% of deals failed due to Buyers pulling out (the second most common reason for aborted sales), blaming concerns about house price falls, general economic uncertainty, and fears for their jobs.
1 in 10 deals collapsed because the buyer could not get a mortgage.
The number of homes on the market has shrunk considerably since the housing bubble burst in the financial crisis. Sellers hoping for a strong rebound in prices have been disappointed.
“Expectations have not always been met, modest price rises after the initial post-credit crisis fall had raised the hopes of property-owners regarding what they might get on the market. This unrealistic idea of property values was reflected in the number of sellers aborting transactions once they realised they wouldn’t be getting what they wanted.” said Mr Montgomery.
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