Drops in real estate transactions hit 5-year high

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.

Conversation property – MPU

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.

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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%
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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

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