- Mergers and exits leave the average firm handling more transactions than in 2007
- Seven firms completed 6,000+ transactions last year; just one did the same ten years ago
- Top 200 firms achieved a collective 36% market share, up from 26% at the last peak
- 4,800 firms – 80% of the total – left to fight over 30% of transactions
- Improving systems and processes is the biggest challenge to achieving growth
Conveyancing activity in 2014 fell 23% short of the heights of 2007 but – with fewer competitors in the market – the average number of transactions per firm reached a ten year high according to the first edition of the Conveyancing Market Tracker from Search Acumen, the search provider.
The Tracker draws on ten years of Land Registry data since 2005 to assess market conditions and also gauges the outlook for growth among conveyancing firms in the early part of 2015.
It reveals the total number of firms active in the market last year (5,871) was down 24% on the 7,733 seen in 2007. This loss amounts to 1,862 firms exiting the market or merging with competitors. Last year saw business numbers drop by 204 despite total activity rising by 28% from 2013 to 1,025,634 transactions.
As a result, the recession survivors and new entrants are reaping the rewards of growth. The average firm carried out 33% more transactions last year than in 2013 (175 compared with 131). This is the highest figure recorded in the last ten years: 27% more than in 2005 (138) and edging past the previous high of 173 from 2007 at the last peak of the market.
Battle joined at the top end of the market
Search Acumen’s analysis reveals how competition among the biggest businesses has intensified and driven up the overall average. Seven conveyancing firms completed more than 500 transactions a month last year or 6,000 annually. Only four managed the same in 2007 and just one in 2005. As a result, a record 7% of all transactions were carried out by firms of this size in 2014, compared with 2% before the financial crisis.
Average volumes among the 200 biggest firms were up by 5% last year compared with 2007 (1,835 vs. 1,741 annually). Individually they carried out more than ten times the average of 175 transactions completed by the typical conveyancing firm. Collectively the 200 biggest firms achieved 36% market share last year, up by ten percentage points from 26% in 2007.
The five biggest firms have enjoyed the largest percentage increase in transaction volumes since 2007 (54%). Their collective market share has also doubled over this period from 3% to 6%.
However, their 38% annual growth rate from 2013 to 2014 was bettered by the next five biggest firms (ranked 6th to 10th), whose activity levels increased by 49%. Those firms who ranked 51st to 100th in terms of activity were the next best performing last year: increasing their transaction volumes by 37% compared with 2013.
Mark Riddick, Chairman of Search Acumen, comments:
“The fall and rise of conveyancing in recent years has seen many firms fall by the wayside. Low volumes of transactions in the recession were fuelled by little more than debt, divorce and death. It meant conveyancing in the lean years quickly became a story of ‘survival of the fittest’.
“Those businesses that rode out the tough times are now reaping even greater rewards than they did at the last peak of the market. Especially at the top end of the food chain, more people are coming through the door of the recession survivors than was the case even in the heady days of 2007.
“The fact that the 51st to 100th ranking firms grew faster last year than some of their bigger rivals proves growth is not limited to those already seated at the top table. But competition will hot up even more if transactions fall slightly as expected this year. Conveyancers must do all they can to protect their position and close the gap to those above them so they are not the next ones left behind.”
Top 1,000 firms account for seven in ten transactions
There were 5,013 firms in 2014 that averaged fewer than 25 transactions a month or 300 over the year. This was 24% down from the 6,590 businesses which recorded the same level of activity in 2007. While some of these smaller firms have since merged or expanded to take on higher volumes of customers, others have disappeared as businesses fought for survival.
In another sign of how activity has become more concentrated at the top of the market, 70% of all transactions were carried out by the 1,000 biggest firms in 2014. This compares to 57% in 2007 and left over 4,800 firms – 80% of all those active in the market – to fight over 30% of transactions.
The five biggest firms grew their collective market share from 5% to 6% last year, but this was still less than the 7% they achieved in 2012. The 51st-100th biggest firms made slight gains from 2012 to 2014 (from 7% to 8% combined market share) as did the 101st-200th biggest (from 9% to 10%).
Barriers to future growth
Asked about the three biggest challenges they need to overcome to grow their conveyancing activity in 2015, 60% of firms identified a need to improve systems and processes: making this the number one obstacle to growth. Competition from volume conveyancers was the next biggest challenge with 58% of votes. More than half of firms (56%) cited a need to increase staff recruitment and training.
Mark Riddick, Chairman of Search Acumen, concludes:
“Focusing attention on internal systems and processes will help businesses take control of their own destinies so their survival and growth are not left to chance. Competition from firms set up to routinely handle large volumes of transactions is a harsh fact of life as a conveyancer in 2015. Recruitment and training is one part of the equation, but once you have the right people in place, it is vital to equip them with the tools to achieve peak performance. By fine-tuning their setup, conveyancers can give themselves a fighting chance of taking a share of the spoils.”
