More and more property buyers are pulling out of agreed property sales after their offer has been accepted. We are also seeing on various property websites increasing numbers of property asking prices being reduced. HMRC reported earlier this month that the number of property transactions fell by 12% in April 2022 compared to April 2021.
These are all clear indicators of a property slowdown after substantial average property prices increases during and after covid-19 lockdown. Pent up demand and the desire for space or a change in lifestyle certainly boosted prices during this time.
So why are mortgage applications being abandoned?
Down valuations – surveyors and valuers have recognised that with the huge increase in prices, this has pushed prices to their top end valuation and with potential recession and interest rate increases, the ‘boiling point’ for property markets or peak has perhaps already been bit for this property cycle. is gradually slowing down and asking prices are being cut. Surveyors are liable for their professional valuations, and they do not want action against them from lenders if they overvalue a property.
Spontaneous or impulsive buying – with the stampede to find the right property, in high demand, low availability areas that property buyers are making quick and perhaps ‘over the top’ offers to secure their desired property only to then rethink and reassess their offers only to pull out.
Estate agent pressure – clearly an estate agent’s job is to secure the best price offer from the most suitable buyer for their client, the vendor. In addition, with lower supplies of properties on the market, agents push for higher prices to not only please the client but also to potentially increase their own fee. Prospective buyers can easily be put off if under pressure form an estate agent
Cost of Living – inflation is here, energy and food prices are here, Pressure on our own pockets is getting bigger. Whilst buyers were buoyant up until the end of 2021, costs of living are making people more cautious about committing too much financial to an expensive property purchase that will likely fall in value in the next year or so.
The property bubble bursting is almost upon us. We believe the increase mortgage applications being withdrawn will increase repossessions too. Caution is the ‘buzz’ word for property in eth next 12 months.