The UK housing market is not facing a so-called ‘Armageddon’, despite some press reports to the contrary, said broker Davy.

UK housing market conditions have undoubtedly been “very challenging” in recent months amid higher mortgage borrowing costs and falling property prices, accepts David Reynolds, analyst at Davy, but he believes this could be a short-term response to the disastrous ‘mini budget’ in September.

It is “not Armageddon”, said Reynolds, “but difficult times are coming.”

“Valuations will correct and mortgage rates will stabilise; we don’t think the data points towards Armageddon, although October was extraordinary,” he added. “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 identified Purplebricks as a firm that is likely to be “hurt” by the housing market downturn, but expects Rightmove to remain “somewhat aloof”.

Reynolds said the Bank of England mortgage data is the “only true forward-looking indicator” for estate agents, with an increase in approvals today roughly translating into an increase in sales in approximately three months.

He continued: “An increase in approvals requires the number of active buyers to rise and for lenders to see lending as a reasonable investment – giving some insight into lenders’ expectations for the future health of the market. Fears of falling affordability may lower the rate of mortgage approvals.”

Looking at housing affordability amid soaring inflation, the analyst said the squeeze on disposable income and increasing interest rates meant “there was going to come a time where affordability outweighed the demand to move home.

“With approvals down 10.6% in October and house prices falling in three of the last four months, it seems that time has arrived.”