One in three home purchases fell through over last year, while the average length of time it takes to complete a sale has lifted 23% to 153 days in three years, according to Smoove.
The home moving platform says that 34% of home buying purchases fell through in the last 12 months in its first bi-annual Home Movers Report, which aims to highlight the “inefficiencies and pain points that run through the entire housing market system”.
The report adds that a collapsed sale may also lead to “wasting almost £2,000 on associated costs” such as legal and surveying fees.
It points out that “the volume of busted transactions contrasts with booming market activity”.
New instructions have risen by 36% year-on-year, the study says, with first-time buyer activity jumping by 54% over the same period.
The report also highlights that property completions are getting longer. It says over the last six months, the average time to complete was 153 days, which is more than five months. Compared to 2019, before the pandemic, this period was 124 days – an increase of 23%.
“The increase is most likely a result of the post-lockdown boom, as changing consumer lifestyles and demand outweighed supply, combined with greater capacity constraints for solicitors, and local authority searches taking longer to complete likely due to a backlog,” the survey points out.
But the report adds: “This surge in demand has caused a supply crunch, which has impacted house prices and mortgages.” The average remortgage value is currently £390,647, up from £352,900 the previous year.
It says that prices across the housebuying chain have jumped over the last year. Solicitors fees have risen by 11% to £1,413, Homebuyer surveys are up 13% to £525 on average, while average UK stamp duty costs have also risen 3.8% to £5,502 year-on-year.
Nine in ten homebuyers found moving home stressful, and 55% add they were unlikely to move again within the next five years, “signalling the whole process puts homebuyers off from moving, potentially staying in homes that may be unsuitable in later life”.
Smoove chief executive Jesper With-Fogstrup says: “One in three homebuying transactions should not be falling through. This figure represents tens of thousands of broken dreams and huge sums of money essentially poured down the drain.
“Creating more certainty around property transactions is essential. It will probably require legislative reform to provide greater protection to buyers and sellers once offers have been accepted.
“However, in the meantime, there are many things the industry could do to reduce stress levels and the proportion of transactions falling through.
“As we’ve seen, the sheer length of time is a major driver of stress and uncertainty. The entire process requires significant digitisation and automation, expediting paperwork and alleviating pain points. People should be able to engage with the transaction process entirely online or via an app, providing digital IDs, signatures and form filling and see its progression in real time.”
Smoove says information on new instructions, mortgage values, associated home moving costs, and completion times were sourced from its database. All other consumer survey data was sourced from a Censuswide poll of 1,000 homeowners aged 25 and over who had moved in the last six to 24 months conducted between 14 April and 19 April.