Preparing for the storm 

Property prices are still very buoyant.  Auctions in general are achieving well above guide prices.  The interest rates have recently dipped slightly, a five year fixed can be obtained for just under 5%.  This is actually a reasonable rate.  Historically looking, if you look at rates before 2009 when everyone got spoilt and conditioned with the very low rates, the current rate of borrowing is reasonable.  
  
Agents in Central London report many cash buyers are still active in the market.   
  
I do not believe we are going to come out of this well.  The interest rate decrease is temporary in my opinion.  One will start to see distressed stock coming to the market post January 2023.   
  
How exactly the property market will respond will be interesting.  UK property has in previous times of uncertainty been used as a hedge, a safety deposit box.  Not even necessarily to make huge profits but to keep the funds safe, against the economic elements.   
  
This is not only on a national level but on an international level.  The middle class and wealthy have a strong appetite for UK property investment.  One time one of the strongest segments of demand came from India.  
  
It will be an interesting few years.  If you’re an investor there will be opportunities, the likes which haven’t been seen for many years.  However, if you happen to be owning property, where the mortgage will be expiring in the next couple of years, be prepared for a shock; your monthly payments will likely be multiple times higher than what you have been used to paying.  For those who are highly geared and have no other recourse this will be a serious issue.  The time to start planning for this is now, not to put your head in the sand.   
  
One client who has a few blocks up in the north, was quite highly geared, with one lender and on a variable rate.  We advised him to fix up for a five year period, and sell some of his stock, so he is not so highly leveraged.  Our advice resonated and he took action to sell some of the developments he was planning to execute in the coming year.   
  
We’re doing a few mortgages for a local estate agent; his view is quite pragmatic.  He was in the middle of a deal when the interest rates increased.  He reasoned the extra he will be paying in interest over the next five years could be deducted off the sale price; convincing the seller that he will experience the same issue with another buyer.  The deal was agreed in a very different environment.   
  
One thing is for sure, properties do not collapse.  Values may decrease in certain geographical areas and price points.  A property cannot disappear; this is one of the reasons why they are used as a hedge.   
  
Property investment should have a positive cash flow, as there is no certainty prices will not carry on decreasing from the point one has made the purchase.   
  
If it is cash flowing positive, you will be able to weather the storm and any further declines will be justified.