Estate Agents Market Report 2007

This market report examines the estate agency market in the UK, focusing on residential property agencies. It excludes property services such as auctioneers, valuers, estate managers, property companies and property consultants.

Report estimates suggests that, in 2006, estate agency revenues from residential sales amounted to £6.16bn. The total number of residential property transactions in the UK was 1.8 million. This figure excludes land and commercial property transactions. Agency revenues include financial services income and property management income, as well as commission from the sale of property. The majority of estate agency revenue — 72.4% of total revenue in 2006 — is derived from sales of residential property.

The estate agents market is currently reeling from the latest Government announcement regarding Home Information Packs (HIPs). After 10 years of discussions and proposals, in May 2007, the Government announced that HIPs would initially apply only to four-bedroom and larger houses. In other words, most properties would be exempt. HIPs were going to be mandatory for the sale of all properties from 1st June 2007, but a High Court ruling at the end of May forced the Government to delay full implementation. The Government is now caught between two opposing camps: the estate agency sector, which, overall, wants nothing to do with HIPs — at least in their present form; and all of those who have invested in training to be the inspectors for HIPs and the firms that have trained them — all of whom have an obvious vested interest in seeing HIPs being imposed. Primarily, estate agents did not want to see HIPs implemented because they believed that it would deter `speculative property sellers', who play a significant part in the market.

Meanwhile, interest rates have risen to 5.75% by July 2007. The interest-rate rises are gradually slowing the property market, although there remain pockets of high activity, notably in London.

By far, Countrywide Estate Agents remains the largest estate agency, followed by Connells Residential, LSL Property Services (incorporating Your Move and Reeds Rains) and Halifax Estate Agency. This is an industry that is gradually restructuring, with acquisitions and mergers topical issues in 2007. After the purchase of Countrywide Estate Agents by a private-equity group, there is speculation that another chain of agents will be acquired by another investor. Meanwhile, Strutt & Parker and Lane Fox are in merger talks. Not surprisingly, the smaller, independent agencies feel threatened by the growing strength of their larger competitors.

Two issues are paramount for estate agents. The first is the future of HIPs, and some form of compromise between continuation and outright abolition seems likely. The second is the power of Internet portals and, indeed, the power of the Internet itself. If estate agents did not exist, would they now be invented? This is the fundamental question that the estate agents market has to answer. Report forecasts that, between 2007 and 2011, estate agency revenues from residential sales will increase by 2%, with the number of property transactions in the UK rising by a forecast 1.8%. SHOW LESS READ MORE >

1. Market Definition

REPORT COVERAGE

Table 1: Estimated Number of Estate Agency Branches in the UK, 2001-2007

MARKET SECTORS

Sole Agency Agreements
Joint Sole Agency Agreements
Multiple Agency Agreements
Estate Agent Fees

Table 2: Number of Agents Involved and Typical Fee by Type of Agreement (number and %), 2006

Estate Agent Income

Table 3: Estimated Breakdown of Total Estate Agency Revenue from Residential Sales (%), 2006

MARKET TRENDS

Rising House Prices
A Splintering Market
The Impact of Buy-to-Let Customers
A Shortage of Properties
Seasonality

Table 4: Seasonality of Estate Agency Business in England and Wales (000 transactions and %), 2004-2006

ECONOMIC TRENDS

Population

Table 5: UK Resident Population Estimates by Sex (000), Mid-Years 2002-2006

Gross Domestic Product

Table 6: UK Gross Domestic Product at Current and Annual Chain-Linked Prices (£m), 2002-2006

Inflation

Table 7: UK Rate of Inflation (%), 2002-2006

Unemployment

Table 8: Actual Number of Unemployed Persons in the UK (million), 2002-2006

Household Disposable Income

Table 9: UK Household Disposable Income Per Capita (£), 2002-2006

MARKET POSITION

The UK

2. Market Size

THE TOTAL MARKET

By Volume

Table 10: Total Number of Property Market Transactions in the UK by Country (000 transactions), 2002-2006

Figure 1: Total Number of Property Market Transactions in the UK (000 transactions), 2002-2006

Houses Still More Popular Than Flats
Strong Lettings Market

By Value

Table 11: Estimated Total Estate Agency Revenue from Residential Sales in the UK (£m), 2006

Figure 2: Estimated Total Estate Agency Revenue from Residential Sales in the UK (%), 2006

Affordability
First-Time Buyers

NEW HOUSING

By Volume

Table 12: Number of Permanent Dwellings Started and Completed in the UK by Country, 2001/2002-2005/2006

By Value

Table 13: Value of New Housing in Great Britain (£m), 2001-2006

3. Industry Background

RECENT HISTORY

Franchise and Affiliated Operations

Table 14: The Largest Affinity Groups and Franchise Operations in the UK by Number of Branches, January 2002-2007

NUMBER OF COMPANIES

Table 15: Number of UK VAT-Based Enterprises Engaged as Real Estate Agencies by Turnover Sizeband (number and %), 2004 and 2006

EMPLOYMENT

Table 16: Number of UK VAT-Based Enterprises Engaged as Real Estate Agencies by Employment Sizeband (number and %), 2004 and 2006

REGIONAL VARIATIONS IN THE MARKETPLACE

Regional House Prices

Table 17: Average House Prices by Region (£ and index 1983=100), Second Quarter 2007

DISTRIBUTION
LEGISLATION

KEY TRADE ASSOCIATIONS/PROFESSIONAL BODIES

Association of Residential Letting Agents
National Association of Estate Agents
Ombudsman for Estate Agents
Royal Institution of Chartered Surveyors

4. Competitor Analysis

THE MARKETPLACE

Table 18: The Leading 30† Estate Agencies in the UK by Number of Residential Branches, January 2003-2007

MARKET LEADERS

Countrywide Estate Agents

Company Structure
Current and Future Developments
Financial Results

Connells Residential

Company Structure
Current and Future Developments
Financial Results

LSL Property Services PLC

Company Structure
Current and Future Developments
Financial Results

Halifax Estate Agencies Ltd

Company Structure
Current and Future Developments
Financial Results

Spicerhaart Group Ltd

Company Structure
Current and Future Developments
Financial Results

Arun Estate Agencies Ltd

Company Structure
Current and Future Developments
Financial Results

Savills PLC

Company Structure
Current and Future Developments
Financial Results

Kinleigh Folkard & Hayward Ltd

Company Structure
Current and Future Developments
Financial Results

Hamptons International Ltd

Company Structure
Current and Future Developments
Financial Results

Humberts

Company Structure
Current and Future Developments
Financial Results

MARKETING ACTIVITY

Main Media Advertising Expenditure

Table 19: Main Media Advertising Expenditure by Residential Estate Agents and Online Estate Agents/Move Services (£000), Years Ending March 2006 and 2007

5. Strengths, Weaknesses, Opportunities and Threats

STRENGTHS
WEAKNESSES
OPPORTUNITIES
THREATS

6. Buying Behaviour

CONSUMER PENETRATION

Table 20: Summary of Results (% of respondents), 2007

I Have Engaged an Estate Agent to Sell a Property at Least Once in the Past 7 Years

Table 21: Those Who Have Engaged an Estate Agent to Sell a Property at Least Once in the Past 7 Years (% of respondents), 2007

I Have Bought a Property Through an Estate Agent at Least Once in the Past 7 Years

Table 22: Those Who Have Bought a Property Through an Estate Agent at Least Once in the Past 7 Years (% of respondents), 2007

I Have Moved House at Least Once in the Past 7 Years

Table 23: Those Who Have Moved House at Least Once in the Past 7 Years (% of respondents), 2007

I Would Search the Internet for Properties If I Wanted to Move Home

Table 24: Those Who Would Search the Internet for Properties If They Wanted to Move Home (% of respondents), 2007

I Would Visit an Estate Agent's Office If I Wanted to Move Home

Table 25: Those Who Would Visit an Estate Agent's Office If They Wanted to Move Home (% of respondents), 2007

Estate Agents Give Good Value for Money

Table 26: Those Who Agree That Estate Agents Give Good Value for Money (% of respondents), 2007

Estate Agents are Trustworthy

Table 27: Those Who Agree That Estate Agents are Trustworthy (% of respondents), 2007

Estate Agents are Properly Regulated

Table 28: Those Who Agree That Estate Agents are Properly Regulated (% of respondents), 2007

LOCAL REPUTATIONS — AN IMPORTANT FACTOR

7. Current Issues

HOME INFORMATION PACKS
CORPORATE DEVELOPMENTS
THE GROWING POWER OF THE PORTALS
INDEPENDENT AGENCIES FEELING SQUEEZED

8. The Global Market

OVERVIEW

9. Forecasts

INTRODUCTION

The Economy

Table 29: Economic Forecasts (000, % and million), 2007-2011

FORECASTS 2007 TO 2011

By Volume

Table 30: Forecast Total Number of Property Market Transactions in the UK (000 transactions), 2007-2011

By Value

Table 31: Forecast Total Estate Agency Revenue from Residential Sales in the UK (£m), 2007-2011

MARKET GROWTH

By Volume

Figure 3: Forecast Growth in the Number of Property Market Transactions in the UK (000 transactions), 2002-2011

By Value

Figure 4: Forecast Growth in Total Estate Agency Revenue from Residential Sales in the UK (£m), 2006-2011

FUTURE TRENDS

A Replacement for HIPs?
A Healthy Future for Lettings Agents
How Many Estate Agents Will Survive?

10. Company Profiles

Arun Estate Agencies Ltd
Connells Residential
Countrywide Estate Agents
Halifax Estate Agencies Ltd
Kinleigh Folkard & Hayward Ltd
LSL Property Services PLC
Savills Plc
Spicerhaart Group Ltd

11. Consumer Confidence

METHODOLOGY
KEY FINDINGS THIS QUARTER
THE WILLINGNESS TO BORROW

Confidence Improves

Table A: The Average Amount Consumers Are Willing to Borrow in Order to Purchase Expensive Items at Current and Constant November 2004 Prices (£ and £bn), February 2006-2007

Willingness to Borrow Slips Slightly

Table B: The Number of Adults Willing to Borrow in Order to Purchase Expensive Items (000 and %), February 2006-2007

SPENDING FROM SAVINGS

Slight Increase in Spending from Savings

Table C: The Average Amount Consumers Are Willing to Spend from Savings in Order to Purchase Expensive Items at Current and Constant November 2004 Prices (£ and £bn), February 2006-2007

Saving Grows in Relative Importance

Table D: The Average Amounts Adults Are Confident Spending to Purchase Expensive Items (£ and %), February 2006-2007

12. Further Sources

Associations/Professional Bodies
Publications
General Sources
Government Publications
Other Sources
Bisnode Sources

- Arun Estate Agencies Ltd
- Connells Residential
- Countrywide Estate Agents
- Halifax Estate Agencies Ltd
- Kinleigh Folkard & Hayward Ltd
- LSL Property Services PLC
- Savills Plc
- Spicerhaart Group Ltd