Recent reports claim estate agency closures are on the rise: is this a threat to conveyancers?
Multiple reports, published in the past year, indicate that estate agents are in severe financial trouble.
A report produced by Moore Stephens indicates that 19% or 7000 estate agencies are struggling to survive in current market conditions.
Further to this, 4,928 estate agencies out of 25,560 are showing signs of ‘financial distress’.
A myriad of reasons can be seen as contributing to these difficult market conditions. Initially, the sales of houses are still at a significantly lower level than those before the financial crisis of 2007. The figures indicate that 1.2 million houses were sold in 2016-17; in stark contrast, 1.7 million were sold a decade earlier in 2006-07.
Stir in a saturated marketplace and online competitors, like Purplebricks, offering a fixed-fee for selling a house, and the result threatens to squeeze much needed profit margins from high street estate agencies.
Additionally, the continued growth of housing websites, like Zoopla and Rightmove, continue to usurp the estate agent’s title of property expert.
Data prepared for the BBC that was used for the radio 4 consumer programme You and Yours, by The Local Data Company (LDC), highlights the dire plight of the current estate agent situation.
According to the figures, in 2017 there were 14,021 primarily estate agent operational branches; however, this number had decreased to 13,588 by July of this year. A worrying decline of 3.09%
Similarly, lettings agencies have decreased from 2,212 to 2,118, a fall of 4.25%.
Staggeringly, 100% of the 11 regions of England, Wales and Scotland that were focused on, saw a significant decline in estate and lettings agencies in the past year. Although the statistics do not indicate if any of these agencies have consolidated or merged, it is clear that the current marketplace is extremely difficult to thrive in.
Even the market leader, Countrywide, is struggling to operate in the current hostile conditions. They saw their share price plummet by 60% and have issued two profit warnings in the past 12 months. In comparison, Purplebricks’ revenue only decreased by 8.2%.
Whilst the whole estate agency market is struggling, it would seem the plight of the high street estate agent is considerably concerning.
What does this mean for conveyancers? What happens if the trend continues? Conveyancers use estate agents for referrals; if you’re a conveyancer, relying heavily on estate agency referrals, do you feel under threat by this trend and what strategies can be used to safeguard your caseloads?