Astonishingly, more than a million potential home owners have been gazumped by a rival offer AFTER their bid was accepted.
Market Financial Solutions (MFS) have published a survey of 2,000 people which shows £4.4bn in intermediary fees have been lost as a property purchase has fallen through last minute.
The national figure is just 5%, whereas the London rate sits closer to 15%. “Most people who have dipped their toe into the property market will have felt the frustration of deals falling through at the last minute,” said Paresh Raja, chief executive officer of MFS.
“Not only are people losing out on the fees they pay to solicitors and surveyors, but many buyers are also losing out on their dream home.”
The dog eat dog nature of London property market really shows that there needs to be reforms put in place to protect a potential buyer once their bid has been accepted and the two signed a contract. This notion does not take place in other housing hot spots like California as there are legal rules protecting buyers.
Not surprisingly, the report by MFS showed that deals are most likely to falter because of the availability of funding, and that prospective buyers aged between 18 and 34 were most vulnerable to a funding squeeze.
“As mortgage lenders implement greater regulation, getting finance in a timely manner has become an increasingly pertinent challenge,” said Mr Raja.
A report by eMoov illustrates that this circumstance could happen more often. They analysed house price data from the Land Registry over the last 20 years, which they used to calculate the potential percentage increases in property values for the next two decades.
Since 1996, the main driver of price growth has been the shortage of affordable homes, with house prices in England rising by 320 per cent from an average of £56,000 in 1997 to £234,000 this year.
This means average property values in London could rise by a staggering 80 per cent to £867,000 by 2027, and be almost £3 million a decade later!
However, the research didn’t take into account the stretched affordability of buyers.
“With the negative combination of the rising cost of living eating away at modest pay increases, it is hard to see how property prices can keep rising at a fast pace,” says Miles Shipside, Rightmove Director.
“If it becomes impossible to buy, sellers will also take a hit on the price of their home due to a drop in demand.”
Currently, with affordability being squeezed – the typical home in London, for example, is now worth 14 times more than local earnings – and the Brexit vote hitting market sentiment, buyer focus is now shifting away from the capital.
London’s house prices show strong trends in 2017
In the last 20 years, the average house price in England has increased by 320%.
DMZ thinks it is unlikely that property prices will continue at this rate, a further 320% increase in the value of property across England would push the average property value to the exuberant height of £983,826.
The potential percentage increases over the next two decades are even more alarming in certain regions and would put property completely out of reach for those looking to buy. In London, if the market continues to inflate at such a dangerous rate, the average property cost would climb by a further 480%, putting the average house price at an eye-watering £2,792,783.