ESTATE agents and property investors are growing increasingly nervous by the impact of last week’s Budget, a leading property association has warned today.
The National Association of Property Buyers said its members were concerned at some of the signs which were now beginning to emerge from the market.
Spokesman Jonathan Rolande said: “Property insiders are nervous to say the least.
The nervousness is not so much around what has happened yet – but it is more about what comes next, because all previous dips and crashes have started slowly and then caused enormous damage over years.
“Estate agents are now using the crisis to agree deals, where sellers were saying “no” to a nearly acceptable offer last week, a quick call to recommend taking a deal is working.
“This is in total contrast to last week when sellers were getting increased offers thanks to government money dropping into buyer’s pockets via stamp duty cuts.
“So far people are holding their nerve – it has, after all, only been a few days of relative chaos in the market. But estate agents, buyers and sellers are watching events avidly and awaiting developments.
“If the ship is steadied within the next two weeks, this will be nothing more than a blip. Much longer and we will see a downward pressure on prices.
“Those that have to sell will begin reducing first, as usual it is the financially vulnerable who take the hit soonest.
“Those moving for lifestyle reasons will wait. Landlords will sell up to cash out at the top and put their money into the bank.”
Mr Rolande’s comments came as lenders withdrew a record number of mortgage products as they grappled with the prospect of rising interest rates.
Moneyfacts, a financial information service, said that 935 mortgage products, around a quarter of the total, were taken off the shelf overnight.
Interest rates are expected to rise sharply following the government’s tax-cutting mini-budget on Friday.
Economists are predicting that could lead to a 10-15% drop in house prices.
The cost of government borrowing has risen sharply since Friday and the Bank of England has signalled it will raise interest rates at its next meeting in November.
That in turn will raise the cost of borrowing for banks and building societies offering mortgages.
As a result lenders are withdrawing mortgage deals in order to re-price them.
A total of 2,661 mortgage products are still available – but that is half the number that were on sale at the start of December last year when interest rates started to rise.
Brokers are reassuring those who already have a mortgage, or an agreement for a new mortgage, that they will be unaffected for the time being.
However, when they come to remortgage, they are likely to find monthly repayments have become a lot more expensive.
