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Estate Agents Market Report 2011
Key Note Publications Ltd, Feb 2011, Pages: 111
This Market Report examines estate agents in the UK and their principal market, which is the sale and renting of residential property. Excluded from its scope are: estate managers, surveyors, valuers, auctioneers, property companies, property consultants, and other professionals or organisations that provide specialist property services. Estate agency revenue is predominantly derived from the sales of residential property, which typically amount to approximately three quarters of total revenue, while the remainder is accounted for by financial services (e.g. mortgage and insurance sales), lettings and property management, auctions, valuations, and surveys.
Over the 20-year period to April 2008, the average house price rose to a peak of £201,081 in August of that year, roughly a factor of four compared with 1987, and in 2007, the UK estate agency market was valued at £9.1bn. Approximately 1.6 million property transactions contributed to that figure. Following the global economic downturn in 2008, however, the UK property market slumped.
Data from Halifax show house prices are currently down by nearly 40% compared with 2007, and the number of residential property transactions in the UK amounted to 858,000 in 2009, according to HM Revenue & Customs data — nearly half the number recorded in 2007. National Statistics’ figures put estate agency revenue from residential sales in the UK at £7.51bn in 2009, down by 17.4% compared with 2007. After a brief recovery in the first half of 2010, house prices started sliding again and continued to do so into the fourth quarter.
The findings from a consumer survey conducted in November 2010 indicate that the perceived value for money of real estate agents has declined slightly compared with results from a similar survey conducted 2 years earlier, with a change in perception mainly in the minds of young adults. Encouraging for the industry was the conviction held among the majority of respondents that property represents a safe investment for the future, whereas a significant proportion of respondents plan to buy a property within the next 2 years.
Countrywide remains the largest estate agency, followed by Connells Residential and LSL Property Services PLC, respectively. In recent years, the UK property market — and the London market, in particular — has started to attract foreign investment, in part due to estate agencies, such as Chesteron Humbers, opening operational branches in places such as Hong Kong and Singapore. Other international estate agents such as Savills and Knight Frank are also expected to continue to benefit from the globalisation of the market for prime property.
Home-grown demand for property remains subdued, as many UK buyers continue to struggle to obtain mortgage financing and the country awaits the full impact of the public spending cuts in 2011. The authors forecast that both the number of transactions and estate agency revenue will experience a further fall in 2011. A real recovery in property transaction levels and revenues is not expected until the second half of 2012, coinciding with wider economic revival, rising employment levels and a recovery in real disposable household income.
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