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.”