Jonathan Rolande: Why I fear the long winter period that lies ahead 

A few weeks ago I asked an estate agent friend how the market was treating him.

"I feel like I’ve had a health scare and just been given the all clear," he said. 

That remark really stuck with me. 

Looking back, September was a great month for those of us in the property business.

A flat year suddenly looked brighter as the late Summer sun shone and the Bank of England, seemingly on a mission to punish us all over fifteen long months, decided that we’d had enough – they left rates alone and the buyers appeared. It wasn’t boom-time, but at least there was positivity in the air.

I haven’t spoken to him since then, but I have a horrible feeling he may now have relapsed.  

Although it looks unlikely rates will increase again next month and the economy grew a little in August I do fear about the long winter period that lies ahead - and it has nothing to do with prices falling.

The expected half percent off prices each month for the foreseeable doesn’t really hit us in the pocket, it's £1400 of the average house and £21 of the average commission. It's annoying but it won’t break any of us.

No, what is really beginning to bite is the lack of stock and the lack of turnover. On the one hand, it’s a good thing – it supports prices. If there was a more plentiful supply of property we’d have seen prices tumbling fast.

But for those in the business, turnover of stock is what we need – all those £4000 average commissions flowing in – even without the £21 a month lost – are vital. Without turnover of stock, there is no cash flow. And cash flow is more important than ever if stock is sticking. Rightmove alone is around £50 per month, per property. Property on the market longer needs more viewings, revisits for photos, refreshed marketing, more vendor contact – when the market slows, the expenses speed up.

This lack of turnover looks set to continue right through the winter and possibly beyond.

Agents without deep reserves of cash may not want to read on…

Dr Swati Dhingra sits on the Monetary Policy Committee at the Bank of England. The Committee that sets interest rates. On Thursday she said that interest rates should not rise further because only 20 to 25% of the impact of previous rate rises has ‘fed through’. If we think things are difficult now, imagine if she is right and we have four or five times more pain yet to come…

But the doom is far from a done deal. With an election due by January ’25 (and it could even be as early as May next year)  it already feels as if the campaigning has begun, the Government will be desperate to encourage a feel-good factor to boost their chances and that could turn things around. If Labour win, we may see renewed energy for infrastructure projects and massive housing developments.

We shall see.

But in the meantime we all need to ride out what looks set to be a challenging winter ahead. We can only hope that if interest rates are the medicine, they work. Fast.

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