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Estate Agents Market Report 2003
Key Note Publications Ltd, March 2003
In examining the UK market for estate agents, this report concentrates on the high-street residential agencies. It excludes other property services, such as auctioneers, valuers, estate managers, property companies and property consultants.
Buoyed up by property price rises, the estate agency market has been growing steadily since the mid-1990s. We estimate that there were 1.8 million property transactions in the UK in 2002, an increase of 8.6% on 2001. In the same year, total estate agency revenues increased by an estimated 18.1%, to £5.54bn. Agency revenues include financial services and property management income, as well as commission from the sale of property. However, the vast majority of estate agents' revenue - 72.9% in 2002 - still comes from sales of residential property.
Large estate agency chains still dominate the industry and many of these are owned by major companies. Of the top ten agencies, seven are owned by large public companies. However, the total number of branches owned by the major chains has been falling as they have sought to cut costs and increase profitability. The major estate agency groups include Countrywide Assured Group PLC, Halifax Estate Agencies Ltd, Sequence (UK) Ltd and Bradford and Bingley Estate Agency. The principal change among the chains of agencies is that Countrywide Assured has bought Friends Provident's estate agencies, which makes it an even larger player. The next key development is likely to be the sale of Sequence (UK) Ltd by its owner Royal and Sun Alliance Group PLC.
Although the market has been booming, it has faced many problems. The various and conflicting house price surveys has caused some concern and, as a result, an official house price index might be launched in 2003. Estate agents continue to suffer from a poor public image, partly as a result of a number of high-profile prosecutions and partly because of consumers' perceptions of the service they give and whether or not it represents good value for money. In addition, agents are struggling with a more competitive market in which pressure on commission fees has increased, reducing profitability in many cases.
The industry still has concerns about the proposed launch of a Seller's Information Pack, which would be part of the new Housing Act that is expected to be passed during 2003. While the Pack has been welcomed by the Consumers' Association, it will be costly to prepare.
As more and more property seekers and sellers use the Internet as a source of information, so more estate agents are being encouraged to take advantage of the Internet themselves. There are now eight major property portals, which are receiving a growing number of visitors.
We believe that the property market will slacken in 2003, and, therefore, forecasts a reduction in property transactions and a decline in estate agency revenues. This trend is expected to continue into 2004, with the first signs of recovery becoming evident in 2005.
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