There are fewer homes for sale in Britain than you think

Look in any estate agent's window and it there are plenty of homes to buy. But looks can be deceptive. Many of those properties may not be for sale at all.

Let's say you've just found the house of your dreams. You've put in an offer and you've had it accepted. What are the chances of the deal collapsing before you get to exchange?

The answer, according to figures from property conveyancers 1st Property Lawyers, is 29%. That's up dramatically from even 2009, when the equivalent number from the same source was 21%.

Most of the reasons for this are relatively obvious. 15% of the time, the buyers end up dropping out because they can't get the finance they wanted; 7% of the time, the collapse is about a problem in a different part of the home-buying chain. 23% of the time the buyer simply changes his mind. 8% of the time it is about bad surveys (buyers aren't confident enough to both buy houses and to commit to works at the same time). And 1% of the time the buyer is gazumped.

But the really interesting number in this survey is the top reason for sales falling through: the seller withdraws his property from the market. This is up by four percentage points since 2009 and comes down to the fact that (thanks in part to the demise of expensive 'home information packs') would-be sellers are now able to test the market for free.

They market their properties to see what kind of an inflated price they can get, and drop out at the last minute if they don't get it. This isn't particularly generous behaviour (to buyers or to estate agents) but what it tells us is that many of the sellers out there are only sellers at bubble prices. As long as they can afford not to sell and as long as they think waiting will make them richer they won't actually enter the market. They'll only tease it.

Does this matter? I think so. Why? Because it makes for a dysfunctional market. It tells us that the stand off between buyer and seller is nowhere near over. Buyers still won't (can't) pay the fantasy land prices sellers want. And sellers won't sell if their fantasies aren't fulfilled.

That's a situation that will continue until interest rates rise or mortgage lender forbearance falters (forcing sellers to sell) or the mortgage market returns to its easy lending heyday at the same time as consumer confidence soars.

Back in the 1990s when house prices last crashed, the number of houses for sale rose very fast you could see the excess of supply over demand and know that prices would keep falling. That isn't the case this time. It might look like there are thousands of houses for sale 5,115 houses came on to the market every day last month, says property expert Henry Pryor.

But the numbers from 1st Property Lawyers make it clear that a great many of them aren't really for sale at prevailing market prices. That's why so far it has been inflation rather than large nominal price falls that has begun the hard work of bringing UK house prices back from today's historically nutty levels to something more normal.

But there is still a long way down to go (UK property as a whole remains a good 20% overvalued on historical measures) and if one side ends up having to give, odds are it will be the sellers.

Why? Do you think it more likely over the next five years that the credit market will return to 2007 conditions or that interest rates will rise? Quite.

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