The combined impact of spiralling mortgage rates and the cost of living crisis is being felt in the island’s housing market.

With would-be homebuyers facing the squeeze there are fewer of them willing, or able to afford, to make a move.

As a result, vendors are being forced to reduce asking prices, by between 5 and 10% depending on the value of the property.

Orry Creane, Cowley Groves director, said: ’The market generally is less active and prices are coming down across the board.

‘There is still a healthy number of listings coming through but pricing is certainly being affected.’

He said different areas of the market are impacted differently with homes below £300,000 less affected but those valued between £600,000-plus seeing price reductions of five to 10%.

‘We are listing and we are selling but vendors need to be more realistic to avoid property sitting on the market too long,’ he said.

He said valuations carried out six to 12 months ago will not be the same now.

Conversations with clients looking to buy was now more about what their monthly repayments obligations would be, he said.

But Mr Creane said the rental market is still very strong with prices going up on renewal across the board.

Shane Magee, chairman of estate agents Chrystals, believes that with levels of available property still fairly ‘thin’, this is likely to keep an ‘even keel’ on prices overall.

He said: ‘The exuberance of the post Covid-19 lockdowns has evaporated.

‘The rapid rise in mortgage interest rates has cooled the volume of applicants chasing new listings. From what we understand, lenders are stress testing mortgage applicants at around 9.5%.

‘Given such a change from the prolonged low interest rate environment, it is not surprising that applicants are having to save more to move forward with property purchase.

‘For those that have to sell, we have seen some meaningful price reductions and that will help bring more potential buyers forward.

‘There has been an increase in the volume of applicants needing to sell their own property first, before trading up and suspect part exchanges may come back to the fore.’

He added:’The inflationary cost of living increases are felt by us all and this in turn has made buyers more cautious. Hopefully, we have reached the peak with early signs of inflation starting to fall. This in turn will ultimately lead to reduced borrowing costs.’

His advice for vendors is to price for the current market and not that of 12 months ago.