A leading analyst has signalled the end of a year of bumper profits for housebuilders and estate agents by downgrading the entire residential property sector.

A new note from stock broker Jefferies has forecast a weak year ahead for the sector, wiping out the buy recommendations it previously held, and warning that London and the South East could experience house price falls.

Publication of the research note sent share prices across the sector falling.

“Negative newsflow on UK mortgage approvals, UK housing transactions, weak house-price data and lower UK GDP growth will lead to share price weakness in the UK residential sector” in the first quarter, wrote Anthony Codling, Jefferies' property analyst.

"The weakness will continue into the second quarter because of uncertainty caused by the UK national election in May," he added.

“We also believe that house price growth will slow significantly during the first half and may even decline in some parts of London and the South East, while there is uncertainty around the outcome of the election and the prospect of a new mansion tax should power change hands.”