Jonathan Rolande: The next two months will dictate how the market finishes 2023

In his latest column Jonathan Rolande explains why estate agents shouldn’t be distracted by the latest house price index figures.

Nobody reading last week’s latest bulletin from Halifax on house prices will have been jumping for joy. 

According to the bank, homes had almost £1,000 wiped off their value in the past month and in one area they are worth an average of £15,000 less than they were a year ago.

This never-ending procession of doom-laden stories will do little to raise the spirits of those working in the property sector.

But there are, I believe, chinks of light. 

Halifax described the situation as a slow decline. I agree this is the case. We’re not seeing a crash and remember that prices are still higher than a year or so ago. 

I am also quietly optimistic that thanks to reduced fuel costs, a slowdown in consumer spending and the bad weather, inflation may be falling as quickly as we hoped it would

Hopefully this will deter the Bank of England from increasing rates - a reprieve we all need after 14 rate rises.

Right now it’s a case of the new normal – and that normal is a base rate of 5.25% and inflation well above 5%. 

This would have seemed almost unthinkable just a couple of years ago. But the market is resilient – and it always will be. 

The shortage of homes is still a major factor in a small country with a growing population. Buyers, tenants and existing mortgage holders are getting used to the fact that a larger percentage of their incomes must now be spent on housing. Many are making cutbacks elsewhere or dipping into savings, or both.

Unknowns are increasingly occupying the thoughts of those in the industry – the market is holding firm but it is also fragile. Another shock to the system may tip it over the edge into faster and unmanaged decline. But faced with the current set of challenges I think there is a  good chance that transaction volumes will begin to pick up once the gap between seller and buyer price expectation narrows.

August is always a pretty flat month in property – children are off school, buyers, sellers and many in the property business itself are either away or preoccupied with thoughts of being away, especially with the recent unseasonably bad weather. 

So we can expect the figures for house prices and the number of transactions to reflect this when they are released in a month or so. 

They will be bad, but they are only part of the picture. 

It’s what happens in September and October that is really important. Why? Well these are the months that mean the market will finish the year with a bang – or a whimper. November and December still see activity but mostly just the completions of transactions that took place in the months before.

This year, after nine months of flat sales numbers and falling prices, the next two months are more crucial than ever. 

For estate agents, many of whom are pressured by increasing costs at a time of falling income, a good number of sales will give them the fat they need to survive the trickier winter months. 

It will be a welcome boost for home movers and will set the tone for 2024. 

We’re not going to enter next year jumping for joy. 

But it still can be a positive one for the sector and a bridge towards a stronger, more robust housing market than we’ve seen in recent months.