In 2023, elevated bank rates meant that the average cost of a fall through rose by 4.3% to average £3,369
Research from information platform, Home Sale Pack, has revealed that fall-throughs are costing home sellers an estimated £909 million a year.
Home Sale Pack evaluated residential fall-through data from TwentyCI and measured it against the estimated cost of a collapsed sale, based on source value versus house price, adjusted for inflation and including likely legal costs. The platform was then able to understand how much money UK home sellers were losing because of fall-throughs.
The data shows that in 2022, there were 312,770 fall-throughs on the UK residential property market. With each fall-through estimated to have cost the seller an average of £3,229, the total cost of fall-throughs was just more than £1 billion for the year.
In 2023, elevated bank rates meant that the average cost of a fall through rose by 4.3% to average £3,369.
Despite this rise, quieter market conditions and a decline in buyer activity levels resulted in the total number of fall-throughs seen in 2023 declining by 13.8% to total 269,728.
As a result of this drop in fall-through volumes, the total cost of fall-throughs declined by -10.1% in 2023 to stand at a total of £909 million.
But with mortgage approval numbers now on the rise for five straight months, it is clear that market activity is rising as buyers gain more confidence in the economy and come to terms with the new normal of elevated mortgage rates.
While a positive for the market as a whole, this jump in activity could well see the number and total cost of fall-throughs to increase once again.
Home Sale Pack co-founder Ruth Beeton said: Fall-through numbers for 2023 seem to show an improvement for the industry. Less fall-throughs would indicate a more efficient market, but we know that this is not really the case.
Instead, the numbers are down because market activity slowed considerably during 2023, with the cost-of-living crisis and rising interest rates forcing many would-be buyers to delay their searches and weather the storm, he added.
However, the BoE is now showing that mortgage approval numbers are on the rise, with strong growth over the past five months. As per Beeton, this indicates that market activity is about to soar as more and more buyers decide to revisit their buying ambitions.
Beeton added: This means the real true test of our industry’s ability to keep fall-through numbers at a minimum is now arriving at our doorstep, and unless we make concerted efforts to improve the way the conveyancing and broader home selling process works, I suspect the data will not be pretty.
