The number of properties listed as sold subject to contract (SSTC) has increased by 5% so far this year versus the closing stages of 2022.
It comes amid fears of a market slowdown this year. Agency comparison website GetAgent analysed current property market listings, looking at the volume of homes to have already been sold subject to contract and how this differs when compared to last December.
The research shows that across England, 289,347 properties are currently listed as SSTC. This is 13,967 more homes potentially sold when compared to December, a boost of 5.1% in market activity. The equivalent figure this time last year was a decline of 6%.
However, the 289,347 current properties marked as SSTC still sits some way below the 368,360 seen in March 2022. Estate agents have been working the hardest in Wiltshire, where there has been a 44% increase in the number of homes listed as SSTC when compared to the end of last year.
West Sussex has also seen a notable increase, with 42% more homes securing a buyer. In contrast, Bedfordshire, London and the Isle of Wighthave seen the largest reductions in the number of homes reaching the SSTC stage versus the closing month of 2022.
Mal McCallion , chief operating officer for GetAgent.co.uk, said, “while the market has been cooling in recent months, agents up and down the nation have been reporting a strong start to 2023 and it certainly seems as though this initial interest from buyers is now starting to convert, with a higher number of homes being marked as sold subject to contract. Of course, while the nation’s estate agents have been working hard to achieve this, the job certainly isn’t finished, and the focus now is to ensure that these sales make it over the line in what has become a slightly more challenging landscape. However, a surge in market activity when compared to the latter stages of 2022 bodes well for the year ahead and should bring reassurance to agents that it’s business as usual.”
Homeowners pull properties from sale after buyers make low-ball offers
The proportion of homeowners withdrawing properties from the market has soared after sellers were inundated with low offers from buyers. More than a third (35%) of sellers took their properties off the market without selling them last month, up from 24% during the same time last year, according to analyst TwentyCi.
This year, the proportion of properties withdrawn has reached its highest level since September 2020, at 38% in January, and remains above the rates last year. Neal Hudson, of analysts BuiltPlace, said, "homeowners who do not need to sell are pulling out from the market if they do not achieve their desired price. That obviously then has a knock on impact that it reduces the number of homes available for sale which has already been low. It points to stagnation in the market for the time being.”
Jonathan Hopper, of buying agents Garrington Property Finders, said the market had reached the “tail end of the boom. Those that wanted to try and time the height of the market blinked and missed it. After many months of unsuccessfully trying to sell for an overinflated price, they are now throwing in the towel. Equally, there are those that wanted to come to the market at the start of this year and have been kite-flying on price, have not had a bite and are coming off the market because they want to move rather than need to moveand I expect sellers to try again in the spring and summer, when the market tends to be busier."
Fixed mortgage rates are expected to keep dropping this year, which could make it advantageous to wait, experts said. However, prices are also forecast to decline. House prices are already down 3.7% from their peak in August 2022, according to lender Nationwide.
The Office for Budget Responsibility, the Government’s official forecaster, released a revised forecast for house prices yesterday, saying they would plunge 10pc from their peak last year. The OBR had previously predicted a 9% slump. Property transactions are expected to drop 20pc from their peak in 2022.
Mr Hopper also blamed estate agents for listing properties at prices that are too high rather than risk losing clients.
James Waight, of John D Wood & Co estate agents, said he had seen more withdrawals among sellers at the top end of the market in places like central London. He said, “they can afford to purchase another property without having to sell that. They’re in a very fortunate position where if they’re not getting what they deem the property to be worth, then they just won’t sell. The prevalence of discounts presented a good opportunity for those looking to upsize. If you're upsizing, and let's say what you're selling for is going for 5% less, you can pass that same 5pc discount on to your own purchase and the difference is actually beneficial to you. It's a better market to be upsizing in.”
But Mr Hopper warned that discounts were not uniform in all parts of the market, and some sellers were unwilling to accept a discount if they were not also receiving one on their purchase.
Property transactions are taking longer to complete
The MortgageStrategy recently ran an article examining data from TwentyEA showing the average time it takes to sell a UK home has jumped to 65 days and the average property exchanges have risen to 139 days, making a total of 204 days (almost 7 months) to sell and complete an average house – see Home selling times jump 50% to 65 days.
That’s bad news for anyone who wants to sell property before prices drop but even more so for landlords who are paying running costs and mortgage interest on empty properties so that they can sell with vacant possession.
Likewise, it is bad news for anyone with a ‘complicated’ sale – such as properties being sold with tenants in situ or properties in need of refurbishments, because they usually take much longer than a simple sale to both attract interest, for buyers to do due diligence checks and for solicitors to gather and check information.
The article does have some good news – property deals under £200K are now less likely to fall through – however, there doesn’t seem to be any change for other properties from 2022 figures with approximately 1 in 3 properties falling through, doubling the time it takes to sell in those instances.
It stands to reason that the more complications involved in a sale, the more likely it is to fall through which puts landlord sales at even more risk of further delays through failed sales. The good news is that although there is more currently urgency to sell before prices drop, this is not a new problem.