The latest industry index on property busts has revealed that there has been a sharp increase in both the number of property transactions that fail in the third quarter of 2022, and the cost associated with these busts.
The latest index shows that in the third quarter of last year, an estimated 90,188 transactions failed, an increase of 15.6% on a quarterly basis and an increase of 3.6% compared to the same period last year.
This is also the highest quarterly number of failures recorded in the last five years.
What’s more, a combination of runaway inflation and rising house prices have driven the average cost of a property transaction to collapse to £3,337.
As a result, home buyers and sellers are estimated to have been affected by an estimated total cost of almost £301m as a result of their transaction drop in Q3 2022.
This total cost is not only 18.7% higher than the previous quarter, but also 16.3% annually.
There is a silver lining for the nation’s buyers and sellers, as the index’s producers, the House Buyer Bureau, estimate that the total number of declines seen in 2022 will still sit -6.7% below the total seen in 2021.
However, this is largely due to the fact that the first two quarters of the year saw a much lower level of transactions, and the latest quarterly increase suggests that the real estate market could have a tougher ride in 2023.
House Buyer Bureau Managing Director Chris Hodgkinson commented:
“We have seen a steady increase in the number of failed real estate transactions in recent years and despite a fairly steady start to 2022, the latest data shows the number of failed sales hit a five-year high in the third quarter. quarter of 2022.
This is almost certainly due to turbulence across the mortgage sector in September, when lenders withdrew a number of products and raised mortgage rates in reaction to aggressive attempts by the Bank of England to curb inflation through of a series of consecutive interest rate increases.
As a result, many buyers found they could no longer afford to borrow, causing large numbers of property sales to fall by the wayside in the second half of last year.
Unfortunately, we did see a further increase to the base rate in December, and therefore it is likely that this higher level of property declines will not only be evident in the last quarter of 2022, but will likely continue through 2023.”
| Quarter/Year | Estimated number of falls | Estimated average cost of fall up to £ | Estimated total cost of declines in the real estate market by quarter | Estimated total cost of housing market declines per year |
| Q1 2018 | 50,000 | £2,700 | £135,000,000 | £588,600,000 |
| Q2 2018 | 58,000 | £2,700 | £156,600,000 | |
| Q3 2018 | 59,000 | £2,700 | £159,300,000 | |
| Q4 2018 | 51,000 | £2,700 | £137,700,000 | |
| Q1 2019 | 60,491 | £2,761 | £167,015,651 | £770,966,574 |
| Q2 2019 | 71,555 | £2,761 | £197,563,355 | |
| Q3 2019 | 76,401 | £2,761 | £210,943,161 | |
| Q4 2019 | 70,788 | £2,761 | £195,444,407 | |
| Q1 2020 | 66,602 | £2,812 | £187,284,824 | £839,888,160 |
| Q2 2020 | 77,359 | £2,812 | £217,534,445 | |
| Q3 2020 | 77,359 | £2,812 | £217,534,445 | |
| Q4 2020 | 77,359 | £2,812 | £217,534,445 | |
| Q1 2021 | 86,375 | £2,973 | £256,792,875 | £969,468,543 |
| Q2 2021 | 87,817 | £2,973 | £261,079,941 | |
| Q3 2021 | 87,063 | £2,973 | £258,838,299 | |
| Q4 2021 | 64,836 | £2,973 | £192,757,428 | |
| Q1 2022 | 71,613 | £3,141 | £224,936,433 | £779,374,205* |
| Q2 2022 | 78,042 | £3,248 | £253,480,416 | |
| Q3 2022 | 90,188 | £3,337 | £300,957,356 | |
| what change % | 15.6% | 2.7% | 18.7% | – |
| % annual variation | 3.6% | 12.2% | 16.3% | -19.6% |
| * Total annual fall cost for 2022 based on Q1 and Q3 only – latest available data | ||||
| Year | I’m falling through | Annual Q change n | % change Q per year |
| 2019 | 279,235 | – | – |
| 2020 | 298,680 | 19,445 | 7.0% |
| 2021 | 342,778 | 44,098 | 14.8% |
| est 2022 | 319,791 | -22,987 | -6.7% |
Drop Through Volumes Earned From TwentyCI
Estimated average cost of fall based on source value and compared to home price, as well as estimated in line with increases in inflation and increases in legal fees (Sources: Smoove, Homeowners Alliance, Property Rescue , Home Selling Expert)
Total cost of declines in the real estate market based on average cost of declines x estimated number of declines in transactions