There is no doubt that we are all starting to feel the effects of the cost of living crisis. Soaring energy prices and rising supermarket bills are just two of the factors combining to ensure household budgets are becoming increasingly strained. But what effect will the cost of living bring to house buying, in particular the conveyancing process?
How will the cost of living crisis impact the housing market?
Before assessing how the cost of living will impact on conveyancing, we first need to look at how it might affect the housing market. For much of 2022, the housing market has remained buoyant and so the impact is, as yet, still a predicted one. As the cost of living crisis now begins to bite, the housing market has not yet been hugely affected. As the crisis hits disposable incomes harder, it is predicted some buyers will be hit harder than others. First-time buyers saving for a deposit, for example, may find it harder to build the funds they need.
However, one prediction is that the property shortage that has affected the market over the past few years may be overturned. In fact, in recent months, there has been an increase in property listings and this could well continue. If it does, it will level out the problem of demand outstripping supply and this will cause prices to come down. New properties could hit the market in the autumn as sellers look to get in before prices fall too far. There could also be an influx of new listings as people who purchased larger homes during the pandemic find themselves more stretched financially.
How will all this impact the conveyancing process?
It is possible that the cost of living crisis could, in some cases, make the conveyancing process more drawn out. The HomeOwners Alliance says that the entire conveyancing process usually takes anywhere from 12 to 16 weeks, Of course, some completions may be carried out far faster than this and some may take longer. However, expiring mortgages and soaring mortgage repayments caused by higher interest rates could impact on some of those stuck in chains.
If these issues do affect people locked in a chain, it is likely that due diligence processes could take additional time, making the work of conveyancing solicitors longer overall. It could also add extra layers of complexity to sales and chains.
Down valuations, which occur when a surveyor deems a property worth less than the price a seller and buyer have agreed, can also extend the process and could become more common if chains take longer to move and prices are falling.
You can also expect the strain placed on budgets by the cost of living crisis to prompt buyers and sellers to negotiate harder in a bid to get as much as possible, or to save as much as possible in the face of the increased cost of borrowing.
While an increase in property listings expected this autumn may slow down house prices, there is nothing yet to suggest it will cause fewer transactions. In fact, it may actually see an increase in transactions, with more buyers seeking the services of conveyancing solicitors such as Sam Conveyancing. Conveyancers may find themselves with large caseloads, despite the economic situation.
This comes after the Stamp Duty holiday brought in during the Covid 19 pandemic caused a huge surge in activity in the property market and the conveyancing sector, creating something of a bottleneck of sales for solicitors to contend with.