House prices in Britain are likely already falling according to Melissa Lawford, the property correspondent at The Telegraph. Delays in the collection of data mean that current official figures for completed purchases reflect deals from months earlier, when mortgage deals were lower.

If prices are falling, they are certainly not being reflected in the current figures. The average price of a property coming to market has, once again, reached a new record high of £371,158, an increase of 0.9%.

The lack of stock in the property market is continuing to drive property prices up but we are beginning to see demand slow. Overall demand was down by 15% when compared to last year and first-time buyer demand is down 21%. A sign that buyers are becoming more cautious in the wake of the cost-of-living crisis and the uncertain state of the market.

However, the Covid-19 Pandemic had huge effects on the housing market, creating a boom. There was a mass exodus from the cities to rural areas offering more space. Therefore, recent year’s statistics having been bolstered by the unusual market activity created by the pandemic. As we return to more regular activity naturally statistics are going to drop when compared to their current elevated condition.

The current figures when compared to the figures from 2019, before government lockdowns and the pandemic took hold of the country, look more promising. Overall demand when compared to 2019 is still up 20%, with first-time buyer demand up 24%.

Similarly, when looking directly at price drops the number of properties being reduced currently sits at around 23% which is still much lower than the pre-pandemic five-year average of 32%. The figures may be comparatively good when comparing back to 2019 but if the market were to face a course correction after the pandemic to become more in line with previous numbers, house prices would also have to take a significant drop in order to counteract the growth caused during the race for space.

And the rising rates might just bring this on. Around four fifths of homeowners have been protected from the immediate effects of the rising rates due to being on fixed rate deals. But what happens when those fixed rate deals expire?

According to UK Finance, a lender body, an estimated 1.8 million fixed rate deals will end during 2023. That’s 1.8 million who’ll see their mortgage rates rise in line with the latest rates during the year. In early November, The Bank of England is expected to raise rates further in order to combat rising inflation. Resolution Foundation predicts that more than five million families will see their annual mortgage payments rise by an average of £5,100 over the next two years.

This is likely to force many sellers onto the market who simply cannot afford their new rates, which will push prices down significantly. Oxford Economics who monitor 18 different advanced economies have found that property values are dropping in half of them. They predict some countries to suffer price falls of 20% with Britain getting off lighter. Only seeing a fall of 13% across 2023 and 2024.

Landlords will struggle in the coming months as they’ll be forced to raise rents or sell if their own mortgage rates rise to make the buy-to-let model unfeasible. The cost-of-living crisis is already cutting into tenants spending power and many will be unable to afford higher rent costs. Landlords will be faced with little choice but to sell up if tenants can no longer afford their properties and this influx of properties to the market will inevitably lower prices.

Speed will be the key going forward for any looking to offload their properties to get the best price before they drop but currently conveyancers are facing extreme staff shortages and a backlog of work following the pandemic boom. The wait between agreeing a sale through private treaty and completing has reached a record high of 133 days. For those looking to buy with mortgages they are finding that the process is dragging on for so long that their mortgage offers are expiring and rates are rising so fast that their replacement loans are triple the cost. Purchasers will be faced with the difficult choice between finding money to cover the higher mortgage bill or abandoning the purchase altogether.