Analyst: Property market is not facing Armageddon

A market analyst has rejected claims that the property market is heading for so-called ‘Armageddon.’

Rising interest and mortgage rates as well as falling house prices and increased fall-through rates have lead some commentators to warn of a property market slump.

But David Reynolds, analyst at Davy, has rejected this, accepting that while there is a challenging operating environment ahead, it is too far to call it an Armageddon.

His report highlights uncertainty caused by the mini-Budget, adding: “Mortgage rates remain elevated and affordability is being squeezed.”

The report notes that Zoopla recorded a 40% transaction fall-through rate in October, which “hurts estate agents like Purplebricks.”

However, Reynolds said Rightmove remains “somewhat aloof,” insulated from volume and price. 

Despite average house prices falling for the third month in four, interest rates mean the monthly mortgage repayment continues to climb – now at £1,117, a drag on buyers’ demand, he said.

Reynolds added: “Not Armageddon, but difficult times are coming With a new monarch, two new prime ministers, three new chancellors and a career-ending mini-budget, October was a very challenging month for the UK housing market.

"Valuations will correct and mortgage rates will stabilise.

“We don’t think the data point towards Armageddon, although October was extraordinary. Estate agents will be squeezed by rising fall-out rates and, as we have said before, Rightmove would need Armageddon and mass agency failures to buckle.”

Reynolds maintained a neutral stance on Purplebricks and OnTheMarket and is still backing Rightmove to outperform.