Spiralling interest rates, soaring inflation and rocketing mortgages have created a “perfect storm” which will result in another five per cent drop in prices by Christmas. 

That’s the stark warning from industry commentator Jonathan Rolande, from the National Association of Property Buyers.

He says: “I think we are likely to see a further five per cent eroded from sale prices this side of Christmas. Those who are employed within the property sector should be concerned not so much with price falls, but instead by the reducing sale numbers. 

“This is starting to indicate a shift in the market where many homeowners are opting to wait and see what happens to the market and interest rates, and those that are trying to sell are not yet reducing their prices by enough to encourage the smaller number of buyers now looking. 

Outlining how he thinks the rest of this year will develop, he adds: “The second half of 2023 looks to be quite bleak for many estate agents who will be unable to build up the financial reserves needed to see them through what is likely to be an even more challenging winter market. 

“In the rental markets further rises in borrowing rates look likely and the supply of rental property is likely to reduce as landlords sell and aren’t replaced with new entrants, challenging times lay ahead for tenants. Expect further rises in rents although at a slower rate than we have witnessed. We will soon reach a point where further steep rises simply aren’t sustainable.” 

Rolande’s comments come as a report revealed that buyer interest, sales and property prices suffered in June as mortgage rates continued to rise. 

June saw new buyer enquiries reach an eight-month low, pointing to a ‘renewed deterioration’ in the UK sales market, the Royal Institution of Chartered Surveyors said. Property prices continued to slow in June and many estate agents surveyed by Rics think further falls could be on the cards in the coming months.