The UK’s biggest two agents have reported on the impact of fewer transactions.
Countrywide this morning reported income for the first quarter was £162m – down 13% from £187m in the same period in 2016.
The group said this was “in line with our expectations”.
It said the first quarter of 2016 was boosted by the acceleration in transactions on buy-to-let properties and second homes in response to the impending changes to Stamp Duty which became effective April 1 2016.
Today’s trading update went on: “As expected, underlying performance in Q1 2017 was impacted by a continuation of the declining market trends seen in Q4 2016, resulting in a 29% reduction in house sales exchanges across the Group on a like for like basis.”
Countrywide also reported that the rollout of the digital sales proposition remains firmly on track, with the launch for Bairstow Eves now under way in addition to both Entwistle Green and Bridgfords that were launched earlier this year.
With these three key brands now in rollout in addition to the original pilots, the group said it is on track to achieve coverage by the digital model of around 50% (c. 400 branches) of the group’s total network by June.
Alison Platt, CEO said: “I am pleased that we have maintained the pace of our transformation agenda during the first quarter.”
“The snap general election called is not expected to significantly alter the overall level of market transactions for 2017 and we still expect the market to be around 5% below 2016 levels.”
Countrywide this morning also announced the appointment of a new non-executive director. She is Natalie Ceeney, most recently chief executive of HM Courts and Tribunals Service.
LSL, the country’s second biggest agent, this morning ahead of today’s AGM, also reported slower house sales compared with a year ago, but said its trading performance was “slightly ahead” of expectations.
In the three months to the end of March, estate agency revenue fell 5.5% year on year.
At flagship London brand Marsh & Parsons, revenue fell by 15.8%, reflecting reduced exchanges.
LSL, like Countrywide, said it expects to see fewer house purchase transactions this year.
LSL reiterated its strategy of growing profit per branch, expanding the number of Marsh & Parsons branches, and continuing to make selective acquisitions.
This morning’s statement also said the business is “exploring options to capitalise on digital opportunities created by the growth in consumer acceptance of online and hybrid estate agency business models”.
Analyst Anthony Codling of Jefferies said that Countrywide was doing its best to mitigate “a horrid second hand housing market”.
He said: “Although Countrywide may be down, it is not out and if what doesn’t kill us makes us stronger, we expect the group to emerge strongly from the storm once it has run its course.”
He said of LSL that the group was keeping its head down and delivering “in the face of a very challenging sales market”.
So instead of trying to increase market share by differentiating themselves on service and results, Countrywide intend to major on launching a reduced service low fee offering which will undoubtably do nothing for their profits.
Are they aiming to shift from being one of the most expensive to become the Lidl of high street agency?
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Bad analogy AgentV. Lidl are a highly successful and growing business.
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Who are highly successful by selling their stock quickly and for a cheap price!
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More to the point they sell ‘others stock’ on their shelves, meaning they can revenue from stock they WOULDN’T have had.
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More like Woolworths. Going, going, gone.
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Did I hear woolworths were coming back?
are we having a bad analogy day ?
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Revenue down, profit down and the answer is to rush headlong down a ‘cheap fee’ model because the ‘we’re retail’ strategy has failed spectacularly. Derisory pay increase across the board in an inept attempt to assuage the masses leaving as soon as alternative employment becomes available. The debacle continues!!!
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Surprised that we haven’t had an eMoov press release yet predicting the end of Estate Agency as we know it! #MissedOpportunityRussell
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Funny that Anthony Codling of Jefferies is saying Countrywide are doing the right thing but has a 97p price target for PurpleBricks.
Didn’t he also say that 1 in 3 of PurpleBricks’ customers are paying and not selling and that only 14% of PurpleBricks’ listings convert to sales?
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funny that you care
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Why?
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Countrywide have produced videos to help their customers.
The branch sales progression video has the caption: “As a high street service customer, we’ll handle the next steps of your property sale on your behalf. We’ll chase all parties involved in your sale and provide you with regular updates. We’ll deal with any issues uncovered with your property survey and help with legal matters. By using our website you can still get hold of clear, easy and convenient information when you need it.”
For the online sales progression video, there’s the caption: “You’ve agreed an offer, your next steps are to generate a memorandum of sale and remove your property from the market, via your online account. Your address details, offer acceptance, special conditions and agreed price will already show up in the form. Add your solicitor’s details and submit to create a document for you and your buyer. We can find you a solicitor to carry out the legal matters connected with your sale. We can also give you advice on your next steps towards completing your sale. If it all gets too much we’re here to support you, upgrade to our high street estate agency service and let your team of agents handle your sale.”
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