October saw a 52% seasonally adjusted month-on-month drop off in property sales, evidencing a rush to buy influenced by the stamp duty holiday.
There has been a fundamental change in what buyers want, as people move out of cities to seek more space, according to Karen Noye, mortgage expert at Quilter.
October saw a 52% month-on-month drop off in property sales following the withdrawal of the stamp duty holiday at the end of September, evidencing a rush to buy, heavily influenced by the government scheme.
This, coupled with there being fewer international buyers, has already impacted transactions in built up areas such as central London.
The end of the stamp duty holiday will have exacerbated the downward transaction trend, said Noye.
She added: “The latest ONS UK house price index showed a record high average UK house price of £270,000 in September, £28,000 higher than the same time last year.
"While prices still seem to be on the up, the huge drop in property transactions may well begin to nudge overinflated house prices back down over the coming months."
While house prices may begin to slowly decrease, the anticipated interest rate hike will likely put potential home buyers off further, said Noye.
"Not only do house prices remain in a hugely inflated state, but a rise in interest rates will push mortgage costs higher as providers are typically quick to pass on rate rises to their customers," she added.
Looking to a rate rise, Noye said this would likely push home ownership even further out of reach for first-time buyers.
She said: "To enable them to get on the property ladder, they often need to borrow the maximum amount available.
"An increase in monthly costs would make buying a home even less affordable, particularly on top of often already higher mortgage rates as a result of higher loan to value.”