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Estate Agents Market Report 2008
Key Note Publications Ltd, Aug 2008, Pages: 103
This Market Report examines the UK market for estate agents, focusing on the residential property agencies. It excludes property services such as auctioneers, valuers, estate managers, property companies and property consultants.
We estimate that estate agency revenues from residential sales amounted to £6.71bn in 2007. Revenues are derived from financial services (such as mortgage and insurance sales), lettings and property management, auctions, valuations and surveys, as well as commission from the sale of property. However, the majority of estate agents' revenue — almost three-quarters — is generated from sales of residential property. The total number of residential property transactions, i.e. excluding land and commercial property transactions, was estimated at 1.8 million in 2007.
The housing market has been on a roll for 13 years, so a sizeable proportion of estate agency staff have not worked in conditions as difficult as those they are now facing. As a result, they lack the experience required to survive in such a market, and some of the younger estate agents might well withdraw from the market. Indeed, there are already suggestions that the market as we know it today will not exist in 10 years' time, given the currently dire state of the property market and the opportunities for developments on the Internet.
Countrywide remains the largest estate agency, followed by Connells Residential, LSL Property Services and Halifax Estate Agency. The industry continues to restructure. Strutt & Parker has merged with Lane Fox and Foxtons has been sold to a private equity firm. In June 2008, Humberts went into administration but was subsequently acquired by a joint-venture company. Although the firm will remain in business, some closures would seem inevitable. Indeed closures have already taken place across the industry and, by the end of 2008, it is likely that there will be 2,000 fewer estate agency branches than there were at the beginning of the year, with more likely to close in 2009.
Given the growing power of the Internet, many industry observers believe that, when the estate agency industry does recover, it will not resemble the industry of today. It is expected that a period of restructuring will result in a smaller market and more people will be selling property without using an estate agent.
We forecast that both the number of transactions and estate agency revenue will decline in 2008 and 2009, and the market is not expected to recover until at least 2010.
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