This Key Note Market Report examines the estate agents market in the UK. It focuses on residential agencies and excludes property services such as auctioneers, valuers, estate managers, property companies and property consultants.
Key Note estimates that there were more than 1.5 million property transactions in the UK in 2003, which represents a decline of 12.9% on 2002. Total estate agency revenues were worth an estimated £5.46bn, down by 1.4% over the same period. Agency revenues include financial services income and property management income as well as commission from the sale of property. However, around 70.5% of estate agents' revenue still comes from sales of residential property.
The major estate agency chains, most of which are owned by major companies, continue to hold a dominant position in the market. Of the top ten agencies, six are owned by large public companies. Nevertheless, although these large agencies play a major role in the market, it is noticeable that, with one or two exceptions, they continue to reduce their branch numbers. The major estate agency groups include Countrywide Estate Agents, Connells Residential, Halifax Estate Agencies, and Bradford & Bingley Estate Agents. The most important development has been Connells' acquisition of the Sequence group of estate agents from Royal & Sun Alliance in October 2003.
Although the market was very strong throughout 2003 and for the first 4 to 5 months of 2004, the market has become more competitive. There is undoubted pressure on fees and, since late April 2004, the market appears to have slowed. Property is apparently moving more slowly than it did at the beginning of 2004, and property prices are said to be softening. The Bank of England considers that current property prices are unsustainable and has promised gradual interest rate rises throughout 2004. Consequently, there is some concern about the market's immediate future among estate agents.
Meanwhile, the Housing Bill is going through the Parliamentary legislative process. It includes the Home Information Pack (formerly the Sellers' Information Pack), which only has the full support of the Consumers' Association. Estate agents and surveyors have serious reservations about the Pack and are still in discussion with the Government on various points.
The market has been growing rapidly since the mid-1990s, but in summer 2004, there were widespread fears that the market's activity was about to peak before slowing down. Although a market crash is not anticipated, Key Note forecasts that property transactions and estate agency revenues will fall between 2004 and 2008.
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