In a grim forecast for the property market, industry commentator Jonathan Rolande, representing the National Association of Property Buyers, has issued a stark warning. He predicts that the combination of soaring inflation, skyrocketing mortgages, and spiraling interest rates will lead to a further five percent decline in property prices before the end of the year.

While the focus has often been on falling prices, Rolande draws attention to the diminishing number of property sales. This trend indicates a shift in the market, as homeowners adopt a wait-and-see approach regarding market conditions and interest rates. Additionally, those attempting to sell properties have yet to reduce their prices sufficiently to attract the smaller pool of potential buyers.

Looking ahead to the remainder of 2023, Rolande suggests a bleak outlook for estate agents. Many will struggle to accumulate the financial reserves necessary to navigate what is anticipated to be an even more challenging winter market.

In the rental market, borrowers can expect further increases in borrowing rates. As landlords choose to sell their properties and are not replaced by new entrants, the supply of rental properties is projected to decrease. These developments spell difficult times ahead for tenants. Although the rate of increase may slow down, rents are anticipated to rise further, potentially reaching a point where such steep hikes become unsustainable.

Rolande’s comments coincide with a report revealing the negative impact of rising mortgage rates on buyer interest, sales, and property prices in June. The Royal Institution of Chartered Surveyors noted an eight-month low in new buyer enquiries, signaling a renewed deterioration in the UK sales market. Property prices continued their downward trend in June, leading many estate agents surveyed by Rics to speculate that further declines could occur in the coming months.