Smoove's first Home Movers Report reveals other market trends and buyer sentiments
One in three or 34% of home purchases fell through in the last 12 months, according to new research from online property platform Smoove.
Its inaugural Home Movers Report also revealed a stark contrast between the volume of busted transactions and booming market activity.
According to the report, homebuying activity has risen significantly, as new instructions are up by more than a third or 36% year-on-year. This number has even increased to 54% year-on-year for first-time buyers.
Smoove said this surge in demand has caused a supply crunch, which has impacted house prices and mortgages. Data has shown that the average remortgage value is £390,647, up from £352,900 the previous year.
Rising house prices and living costs have had both a direct and indirect knock-on effects for associated moving costs, the property platform noted.
With solicitors in high demand and facing capacity constraints, the year-on-year average legal fee has risen by 11% or £140, from £1,273 to £1,413. Homebuyer surveys cost £525 on average, up from £465 the previous year.
Potential homeowners are now paying almost £2,000 in associated costs – money which could be wasted if the transaction then falls through. Average UK stamp duty costs have also risen from £5,302 to £5,502 year-on-year.
Smoove also found that the length of time to buy is climbing. Within the last six months, the average time to complete was 153 days, the equivalent of more than five months. In 2019, before the pandemic, this number was 124 days – meaning the number has increased by 23% since then.
The increase, Smoove said, 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).
Meanwhile, the first Smoove Home Movers Report also bared that nine in 10 homebuyers found the process of moving home stressful. Some of the main reasons for this stress include the length of time it took to complete (40%), the lack of certainty (34%), and waiting for exchange and completion dates to be finalised (33%).
Jesper With-Fogstrup, chief executive at Smoove, commented that the fact many people think home moving is an agonising, horribly stressful experience speaks to a failed system.
“One in three home buying transactions should not be falling through,” With-Fogstrup said. “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.”
Some of the biggest costs homeowners found when moving are legal fees (46%), buying new furniture (44%), and mortgage product fees (32%), not including stamp duty, deposit and estate agency fees. On unforeseen additional costs, homeowners spent an average of £1,640.
Following this experience, over one in two homeowners (55%) would be unlikely to move again within the next five years. When asked what they would do differently next time they move home, more than two-fifths (45%) would save more money, and almost a fifth (19%) would choose a different soliciting firm or estate agent.
“There are many things the industry could do to reduce stress levels and the proportion of transactions falling through,” With-Fogstrup said.
“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. This could really help modernise the industry and transform the home moving experience.”
Smoove said its Home Movers Report, released twice yearly, is designed to demonstrate the inefficiencies and pain points that run through the entire housing market system in the UK. New instructions, mortgage values, associated home moving costs, and completion times are all sourced from Smoove data. All other consumer survey data was sourced from a Censuswide poll of 1,000 homeowners aged 25 and above, who have moved in the last six to 24 months, conducted from April 14-19, 2022.
