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"The busier the market the higher the number of fall-throughs that tend to occur, and so with the rush now on to beat another stamp duty deadline, there’s a good chance that fall-through numbers will continue to rise over the first quarter of this year"
- Colby Short - GetAgent
Estate agents are being warned about the increasing number of fall-throughs taking place across the UK property market, driven by the market's return to health and the back end of last year and the heightened level of market activity caused by another stamp duty deadline.
Fall-throughs are an unfortunate reality when it comes to the UK property market and generally, the higher the number of transactions seen, the higher the number of fall-throughs.
Fall-throughs are on the rise
In fact, quarterly transaction data shows that the most recent peak in market activity took place in Q3 2022 when 337,730 sales completed across the UK. During the same quarter, a notable 90,188 sales fell through, the highest number since the start of 2018.
Since then, sales volumes have been largely trending downwards, hitting a low of 227,390 in Q1 of last year - a drop of 33%. During the same quarter, fall-throughs also fell to 64,865, marking a 28% decline versus the peak seen in Q3 2022.
However, with stability returning to the property market in 2024, transaction levels have rallied, climbing to 296,640 in Q3. The bad news? Fall throughs have once again followed suit, increasing to an estimated 84,079 - the highest quarterly total seen since they peaked in Q3 2022.
How will the stamp duty deadline impact market activity?
With the government failing to increase stamp duty relief thresholds in the Autumn Budget back in October of last year, the race is now on for buyers to complete before the 1st of April this year.
This means that, when the Q4 2024 data is released, transactions are forecast to have increased further, with this heightened level of activity also expected to continue during Q1 of this year.
In fact, further analysis of the data by GetAgent, looking at estimates for England only, has shown the extent at which the previous stamp duty holiday drove the market forward.
Following its initial introduction in Q3 2020 quarterly transaction levels climbed by 38% versus the previous quarter and continued to climb to a peak of 377,280 by Q2 2021 when the initial SDLT holiday ended. Fall throughs also increased over the same time period peaking at an estimated 76,814 in Q2 2021 when the initial SDLT holiday ended, the highest level seen since 2018.
Both transaction levels and fall throughs then fell marginally during Q3 2021 whilst the second phase of the stamp duty holiday was in place, before declining considerably following its expiration in Q4 2021 - with transactions down 35% versus the SDLT holiday peak seen in Q2 2021, whilst fall throughs fell by 31%.
“Fall throughs are an unfortunate reality across the property market and despite the endeavours of the industry to limit their propensity, estate agents will inevitably see a great deal of hard work wasted due to transactions failing to complete," says co-founder and CEO of GetAgent.co.uk, Colby Short.
He adds, "The busier the market the higher the number of fall-throughs that tend to occur, and so with the rush now on to beat another stamp duty deadline, there’s a good chance that fall-through numbers will continue to rise over the first quarter of this year.
"The good news is that the impact of this stamp duty countdown is forecast to be marginal due to the far shorter timeframe buyers have in which to benefit, especially when compared to the initial stamp duty holiday and the prolonged period during which the market was overheating.
"So whilst we may well see transactions and fall through numbers climb before a market correction follows in Q2, it's likely to have a minimal impact in the grand scheme of things and it’s unlikely to destabilise a property market that has been going from strength to strength for some months now.”