More consolidation and closures are being predicted across the UK in the agency sector.
Property adviser London Central Portfolio (LCP) has warned that sales volumes are so low that estate agents are relying on their lettings business to keep the lights on.
However, lettings are set to get hit by the tenant fee ban in June.
Naomi Heaton, chief executive of LCP, said: “The low level of transactions throughout the UK is already having a damaging effect on estate agents. With sales figures so low, many rely more and more on their lettings departments to keep the lights on.
“With the imminent ban on tenant fees coming into effect on June 1, agencies are going to suffer reduced revenue at a time when many are already struggling. It is also likely that many tenants will hold back any move until this date passes.
“The combination of low sales volumes and reduced revenue may well bring further agency consolidation and closures throughout the rest of 2019.”
Sales in London have now dropped 28.8% since the introduction of additional Stamp Duty rate in April 2016, and Heaton said the rest of the UK has now “caught London’s cold”.
LCP analysis of February’s Land Registry data shows price growth in England and Wales was at a six-year low.
Average prices in England and Wales, excluding new build, were up 3.1% annually at £257,260, while sales volumes were down 1.6%.
Prices in prime central London were up just 0.3% annually to £1.8m, while sales have fallen 16.5% with just 66 per week, LCP said.
In Greater London, prices were up 0.6% annually to £610,708, while sales were down 4.8% in February.
Heaton said: “Both prices and transactions are falling in every sector – prime central London, greater London and the rest of England and Wales.
“There is little doubt that Brexit uncertainty is derailing home owners now, not just investors. People’s plans are being put on hold and the economic fall-out of a ‘bad Brexit’ could impact the domestic market for years to come.”
However new figures from Zoopla paint a different picture, saying that transaction volumes have gone up slightly this year.
Its UK Cities House Price Index, based on valuations by its Hometrack brand, found price growth was positive in February across the largest cities in the UK for the first time since August 2015.
Average prices across the UK’s 20 largest cities increased by 2.8% in the year to February, Zoopla said.
It was led by 6.8% annual growth in Leicester while the slowest rates were in Cambridge and London at 0.2% and 0.4% respectively.
The analysis said fewer London postcodes were seeing a decline in price growth but warned there were signs of price inflation moderating in the previous strong cities of Manchester and Birmingham.
Zoopla’s analysis also found there was “no obvious Brexit impact at a national level” on transactions, finding that volumes over 2018 remained in line with the five-year average.
Richard Donnell, research and insight director at Zoopla, said: “While the Brexit debate reaches fever pitch, data on housing sales and demand for mortgages shows buyers are largely unmoved.
“Transaction volumes over 2018 remained in line with the five-year average.
“The latest data shows that housing transactions have increased slightly in the first two months of 2019.
“With unemployment at a record low and mortgage rates still averaging 2%, buyers appear to be largely shrugging off Brexit uncertainty until there is a material change in the overall outlook.”
The Zoopla figures are about as accurate as their on line valuation tool
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I am sure Zoopla will be updating their valuation tool.
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RQ must have written this?
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It might be painful but it’s the only thing that might flush yopa and bricks down the toilet .
Rightmove zoopla are doing nothing to help our industry.
If I had a business that took a £1000 off every agent in the land I would do 2 basic things.
1) no payanyway agents who make sellers negotiate their own prices.
2) no new homes . They aren’t agents so surely a conflict of interest when they mislead buyers. Which new homes do constantly.
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Hit the nail on the head.
But in the meantime if you haven’t escaped the rightmove monthly Tax already now would be a good time.
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Rightmove will need to support their business plan by allowing all sorts of odd businesses to advertise with them to make up for the loss from agencies consolidating.
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Which will make them worthless as only allowing agents on the platform is their moat. They are worthless without this business model.
They are playing a dangerous game. Agents will always be here as an industry.. but will rightmove?
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Tougher times bring opportunities ….although we have to drive hard to take advantage of less.
Still.. I would rather be a High Street/Local Estate Agent than an Online Lister scrabbling for their next dollop of listing commission.
Operating at street level in your own patch does have its advantages.
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Astounds me when i hear an agent complaining about lack of business and then I look at their Google reviews: none, few or awful scores. Yet these are the same agents spending a small fortune on shoving leaflets through my door.
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Which Agent in particular Malcolm.
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Some more info. to add into the mix.
PurpleBricks listings up slightly on March 2018 according to my proxy. Fewer LPEs.
Bellway reporting today for the 6 months to 31st January. Completions increasing 5.6% on the 6 month period to 31st January 2018. And for current trading they say “Trading in the first six weeks since 1 February has been strong, with the Group achieving 259 reservations per week (2018 – 248 per week), an increase of 4.4% compared to the equivalent period in the prior financial year.”
Seems like some areas of the UK doing better than others. BWY state “Both the north and the south of the country have shown growth, with the strongest performances achieved in our Essex, Northern Homes Counties and East Midlands divisions, all of which have sold in excess of 350 new homes. Our divisions in Scotland, where market conditions are strong, have also performed well, bolstered by the opening of our Scotland East division on 1 August 2018. In total, our combined Scottish businesses completed the sale of 437 homes (2018 – 414 homes) and have set the foundations to deliver more significant growth over the medium term.”
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Good analysis ducky.
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PurpleBricks listings up slightly on March 2018 according to my proxy. Fewer LPEs.
So, do you expect another revenue downgrade warning from PB in April/May? They have already gone from £165 – £185million down to £130 – £140million. If they go much lower then their overseas losses will burn through the cash very quickly.
Having fewer LPEs means their frontline service levels get worse and the level of refunds may well rise.
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Still losing £8Million a month then.
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