“As mortgages become unaffordable, especially for landlords, there will be an increase in properties on the market, which will apply downward pressure on prices.
“With the cost of living also sky high, increased mortgage payments will put unprecedented pressure on people’s finances and that will ripple through to the property market.”
Knight Frank’s head of UK residential research, Tom Bill said that despite the steading effect of a new government he expects downward pressures on prices to persist.
“Demand will come under more pressure next year as a growing number of people come to the end of fixed-rate deals and mortgage offers made earlier this year when rates were lower begin to lapse.
“Government stability will help underpin transactions but we are witnessing a fundamental shift in rates take place after 13 years of ultra-low borrowing costs that will lead to price declines.”
He added: “Low unemployment, tight supply and well-capitalised lenders mean we should avoid the kind of double-digit falls seen during the financial crisis.”
Nottingham-based Harmony Financial Services’s director, Imran Hussain agreed and added: "Demand for mortgages slowed down in October due to the extreme market volatility caused by Trussonomics.
"We could well see a drop in house prices across certain regions until stability returns and there is more clarity on mortgage rates, but the fall is unlikely to be extreme due to the lack of stock on the market."
Others took the view that a surge of confidence is needed to bolster the market.
Riz Malik, director of R3 Mortgages said: “There is more chance of King Charles writing the foreword to Prince Harry's new book than there is the property market seeing significant house price growth over the next six months.
“For activity to pick up in the housing market, confidence and some form of stability need to return and both are sorely lacking. The past six weeks or so have blown confidence to smithereens. A lot of people will be sitting on their hands and waiting to see what happens when the Bank of England meets this week.”
jane.matthews@ft.com
