We estimate that 2.4% of GDP is driven by consumer spending linked to housing transactions. We’ve been thinking about how we can all play our part in getting those transactions unlocked as quickly as possible once the market reopens.
The Headlines
- Approximately 386k property transactions and in excess of £1.2 billion of Estate Agent commission is stuck in the system.
- Right now, these transactions are less likely to fall through when compared with 2019 - consumers whose transactions have been frozen are holding their position.
- We have worked with the industry to build a solution for those struggling to identity which cases they need to preserve and which to progress.
Overview
The UK lock down has been extended from the 16th April for another three weeks - the housing market continues to be on hold.
This got us thinking about how much property is stuck in the sale journey and can’t progress; what is going to happen to it? What are the chances that these sales agreed before Covid-19 will simply fall through? And, if I’m an estate agent or conveyancer or surveyor, which of these properties do I focus on first as soon as lock down lifts?
Well, the answers are below…
Most of these people are in limbo right now. They do not know where their home move stands and when they will move into a new property.
We have recent exchanges (some of which will be without associated completions) of 107,000 properties, those that have engaged with a conveyancer and passed the searches ordered stage of 161,000 properties, and finally those that have agreed a sale and not yet completed searches of 118,000 properties.
The totals of Estate Agency commission for each of these three pots are shown down the right hand side of the graphic and currently total to £1.2 billion.
Are Sales Agreed Falling Through?
You might think that because of the number of transactions (pre-Exchange of contracts) stuck in the system that a lot of buyers would pull out – creating a property transaction and a chain fall through.
However, in looking at this on a cohort basis, we found that “Fallen Throughs” were less likely to happen now than they were a year ago. For those that had Sales Agreed in February 2020, they are 16% less likely to fall through from the prior year. And those that had Sales Agreed in March 2020 (the month when lock down started), they are 35% less likely to fall through from the prior year.
What all this means is for the time being the property that is stuck in the system is staying there and buyers are NOT pulling out of their agreed sales, at least for now.
Unlocking Revenue from Suspended Chains
As we look today there are approximately 386,000 properties that are stuck in the system and the questions that many of our clients are asking themselves are :-
- What are the plans for unlocking these property transactions given staffing constraints?
- If, as an estate agent or conveyancer paid on completion, how do we pick the transactions that will get revenue to us the quickest?
We thought these were interesting questions too and that they were best answered by our View My Chain platform. We got our heads together with some of the largest partners in the industry and set about adding more data assets into our solution to solve the problem rapidly for a substantial part of the market.
We can effectively look at each property transaction in isolation as well as together with its linked chain to determine how close a property is to completion. We give each property a completion confidence score and estimate the date of completion where this confidence score is high.
Taking into account the likely future constraints on resources, perhaps staff only partially coming back from being furloughed, with a mountain of work to progress, we can tell you which property transactions to point them to first to maximise your inbound cash flow.
We’d be more than happy to discuss this on a one to one basis. If you would like to know more please do contact Sohail at sohail.rashid@viewmychain.com or on 07793564280