As we expect to see the country starting to come out of Coronavirus pandemic over the second half of 2020, we are likely to see an increase in breakdowns of property chains being a contributor towards property sales falling through.
There are numerous driving forces that contribute towards property chains breaking down including the following:
Employment uncertainty and income stability
With unemployment rates having risen substantially over recent weeks and ongoing concern by employees over their future job security, this has resulted in home buyers taking a more cautionary approach when it comes to proceeding with making their next step on the property ladder. Indeed, there is the risk that a number of job roles will just no longer be required as the situation continues to unfold.
Mortgage product availability
Mortgage products which were in the market just a few months ago may no longer be available, hence directly impacting the ability for home buyers to continue with their property purchase even if they are happy to. This change in mortgage availability is predominantly driven by property valuation uncertainty / liquidity and instability in the employment market, leading to banks reducing permitted mortgage advance rates, adjusting income requirements and/or increasing mortgage rates amongst others. It may be the case that certain properties (short leasehold flats and houses, semi-commercial, certain construction types to name a few) are impacted more significantly by changes in the mortgage market.
Concern over falling prices
With people experiencing this once in a lifetime recent event first-hand, there is natural hesitancy and concern over house prices declines throughout the residential property market. As we have seen historically, property price movements do not take place immediately, however as further house price sale data is released from Land Registry as we move forward, it becomes more apparent as to the direction the market is taking. It is interesting to see press commentary since the lockdown restrictions have been relaxed in China stating the local Chinese residential property market has come back to life with upward price trends (after previous declines). This may be able to provide some hope that UK property prices may follow a similar course. However, it must be noted that during the 2008 crisis and following aftermath, UK house prices fell by in excess of 10% and took many years to return to levels seen prior to the crisis.
Uncertainty over when the world will get back to normal
Having never experienced such a situation and not knowing when everything will return to normal is leading to house buyers taking a cautionary approach, particularly when making large financial commitments. Looking at this from a global perspective, we are already seeing signs of other countries returning to some degree of normality and indeed moving in the right direction.
Property market has been paused
With the property sale market having been paused now for many weeks with viewings unable to take place, surveys not going ahead, legal work being delayed etc. there is just more opportunity for the situation of a home buyer to change, leading to decisions being made to not continue with a property purchase.
These various factors amongst many others impact everyone involved in your property chain and ultimately may affect the immediate buyer of your property either directly or indirectly. There are just going to be a number of people that find it essential, easier and/or less stressful to adopt a ‘wait and see’ approach even if this means pulling out of a current home purchase that may already be in progress.
If you are still looking to continue with your next property purchase and are relying on the sale of your current home to make this happen, it is essential for you to consider what may be going through the minds of the buyer for your property and how they may behave. To offer you peace of mind that a sale of your home can happen, LDN Properties is a home buyer providing chain break solutions to UK residential property sellers and have been trading since 2003. Their chain break solution is typically available for all types of property throughout the UK (including London) and provides assistance for those home sellers looking to continue with their forward property move, with the certainty of a committed professional buyer to purchase their current home in a timescale that suits their needs. What’s more, by having a professional home buyer in place for buying your house or flat, this may well put you in a stronger position when purchasing your new home, with the possibility of obtaining a discount.
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