The property firm has estimated that by the first quarter of 2008 the UK could witness one in 20 properties being put up for sale, with few buyers ready to bite given the unrealistic prices most sellers are demanding.
This assertion comes off the back of data that mortgages agreed for house purchases have fallen by 27 per cent year on year and the fact that estate agents are reportedly marketing 20 per cent more stock than last year with reduced buyers and transaction times increasing by 20 per cent.
Paul Holmes, operations director of Firstrung, said: "Further to the recent data from the NAEA revealing that sales are slowing to eleven sales per agent versus fourteen this time last year and the fact that transactions are now taking on average twenty weeks to complete, as opposed to an average of fourteen weeks in 2005, we'd suggest that estate agents will have their work cut out to maintain any semblance of sales targets they've pencilled in for early 2008.
"Transactions falling through are now running at a record high of 10.7 per cent and with agents currently marketing on average 81 properties each, as opposed to 60 in 2006, it is fairly obvious that there is not a supply problem in the UK housing market.
"There is simply an entrenched denial amongst UK vendors as they continue to value their property with misguided methods; either using personal anecdotal evidence, or a dogged determination for the protection of illusory profits."
Holmes also added that: "Underwriters are now examining mortgage applications with far more care than recently. Decisions in principal are taking longer and with interest rates being increased, higher deposits demanded and mortgage fees increased these cumulative shocks are yet to 'bleed' into the consciousness of the UK homeowner, or prospective buyer.
"However, with the increasinginly 'bearish news' being constantly highlighted in the mainstream media on a regular basis, home owners will inevitably begin to accept that house price inflation has run its course.
"In some ways each sector of the housing market is entering unchartered territory. With record numbers of property for sale, a huge reduction in the amount of mortgage product available and overall sentiment fading rapidly, the market will appear to be somewhat chaotic in early 2008.
"Vendors need to sell quickly and market their property at a competitive level by comparing price results achieved and ensuring that their property is the lowest comparable price locally. Locking in profits may prove to be more difficult to achieve than most vendors realise."
