According to the latest Quick Move Now figures, 28.8% of residential property transactions were terminated in 2024, despite the overall buyer demand being 20% higher as of 26 December 2024 than the same day in 2023. Such figures naturally engender the following question: what is causing property transactions to fall?
Given that market conditions have gradually improved over the past year, it is important to investigate the causes behind the falling success rate of property transactions. Moreover, it will be useful to inspect property sale completion forecasts now that we are in 2025, a year one observer described as a ‘buyer’s market.’
What is Causing Transactions to Fall?
Several factors inform the decision for buyers to exit the transaction process, the most commonly cited reasons being 21.8% experiencing troubles securing a mortgage, 23.6% selecting a different property to acquire, and 27.3% failing to reach an agreement regarding the property price.
On the other hand, sellers may be inclined to likewise stop the transaction process. The most cited reasons here include 5.5% exiting due to slow progress being made and 14.5% accepting a higher offer made by another customer.
Zooming specifically to the second quarter of 2024 as a case example, a total of 76,619 property transactions did not come to fruition. This was accompanied by 187,262 properties being withdrawn by vendors, a figure which amounts to 2.4 withdrawals for every fall-through.
Gemma Young, CEO of Moverly, offered two reasons behind these falling sales, namely customers ‘strugg[ling] with far higher interest rates than they’ve previously become accustomed to’ and sellers not ‘gaining the interest required or at the price they expected.’
Despite interest rates slowly climbing down over the last year, they are still playing a role in making the transaction process less flexible for both buyers and sellers, each conscious of the present market conditions. The high mortgage rates continue to constrain the activity of the market.
Accordingly, Simon Brown, CEO of Landmark Information Group, summarised that ‘without addressing the ongoing affordability challenges and the systemic inefficiencies in the transaction process, we will continue to see a gap between supply and completions.’
How Have Market Conditions Impacted Transaction Rates?
Although the completion of property transactions presents a challenge to the property market, it is important to note that 2024 was a slight improvement over the previous year. Compared to the first quarter of 2024 having a failure rate of 31%, the first quarter of 2023 saw a failure rate of an alarming 56%. Granted, this fell by the second quarter of 2023 to 24%, but it nevertheless points to the less volatile climate of the property market.
Zoopla has described buyers becoming more ‘price-sensitive’ in light of the prevailing high mortgage rates and the expected consequences of the Autumn Budget, yet 2024 underwent a ‘sustained recovery in housing sales’ when considering the 1.1 million properties sold during the year. This figure is expected to rise to 1.15 million in 2025, not least with the fourth quarter of 2024 seeing an increase of 21.5% more properties sold when compared to the first quarter.
Buyer demand has grown by 24% by the end of 2024, and the number of accumulative property listings in 2024 stands at 1,659,023. Moreover, the pace of property transactions has been accelerated to an average of 28 days, seven days quicker than during the first quarter of 2024.
Finally, mortgage approval rates have been gradually increasing over the past year, with the Bank of England approving 68,203 mortgages as of October 2024.
For these reasons, Angela Wallace, Operations Manager of TSPC, said that ‘it will be a slow start to 2025, but by early spring I expect to see growth in all areas of the housing market, with the possible exception of lower priced properties suitable for rent.’
Will Transaction Rates Improve This Year?
Overall, the present data indicates that market conditions are steadily improving and so too is buyer confidence. For while present mortgage rates continue to be less than ideal, they are increasingly becoming more accessible and therefore enabling consumers to participate in the property market, hence the rise in property sales that has occurred over 2024.
Colby Short, Chief Executive of GetAgent, argued that although the market continues to face a ‘challenging landscape’ due to ‘mortgage rates remaining significantly higher than they’ve become accustomed to,’ 64% of agents expect to see an increase in property sales in 2025.
But it’s important to remain cautious. Danny Luke, Managing Director at Quick Move Now, emphasised that ‘if inflation continues to rise, it’s going to make it very difficult for the Bank of England to justify further reductions in the base rate, which will undoubtedly impact mortgage interest rates throughout 2025 and moving into 2026.’
As such, the success of property transactions remains intimately tied to how market conditions unfold. Generally speaking, there is a sense that the success rate of property transactions will improve, though this is contingent on how the market develops over the coming year.
