The Royal Institution of Chartered Surveyors (RICS) is expecting a rocky ride for the housing sector as the economy adjusts to higher interest rates and the tight labour market begins to reverse.

RICS chief economist Simon Rubinsohn, warned: “For now mortgage arrears and possessions remain at historic lows but they are inevitably going to move upwards over the next year, as pressure on homeowners grows.”

The expected rise in mortgage rates over the coming six months is anticipated to outweigh any potential boost from the cut to stamp duty. In September, new buyer interest fell again – the fifth month in a row – with a net balance of -36% of respondents citing a fall in enquiries.

New instructions to sell also continued to fall with estate agents (on average) holding just 34 residential properties on their books. Sales have fallen over the month, with the September figure the most negative reading since May 2020 and the number of sales having now fallen for five months in a row.

Looking ahead, RICS says sales expectations over the next three months, and the 12-month sales predictions also remain negative. Rubinsohn added: “The turmoil in mortgage markets in recent weeks has compounded the increasing level of economic uncertainty.”