Executive Summary
In examining the UK estate agents industry, this report concentrates mainly on High Street residential agencies. Consequently, the activities of property companies, auctioneers, surveyors, valuers and property consultants are excluded. The main focus is on housebuying, rather than letting and renting, although some mention is made of these activities.
Key Note estimates that the number of property market transactions in England and Wales will have fallen to around 1.33 million by the end of 1998. While this is 7.6% lower than the 1.44 million transactions recorded in 1997, it is still the second highest level since 1990. Key Note estimates that estate agents’ total revenue will be just over £3bn in 1998, up from £2.9bn in 1997.
The UK property market has been declining since the spring 1998, with some agencies experiencing falling sales even earlier. Prices rose gradually in the first 3 months of 1998, becoming steady in the summer, before falling by 0.1% in August. Consequently, 1998 will prove to be a disappointing year, especially since a number of agencies reported their first substantial profits for the 1990s in 1997. The stronger profits of 1997 now look to have been a blip in what is becoming a much more difficult market.
Factors affecting the market have included a slowdown in UK economic activity and a reduction in the number of overseas buyers. Further fears concern the future of the world economy and the knock-on effects it may have on interest rates, job prospects and company profits in the UK.
Key Note estimates that there are a total 12,400 estate agency offices in 1998, which is 50 more than there were in 1997. The boom in activity in 1997 persuaded more people to enter this already overcrowded market. However, in the long-term, the number of agencies is likely to decrease. Competition from other professions and from Internet-based agents will increase and more people will start to sell directly via the Internet.
Practices in the industry are now subject to widespread review by the Government and a list of proposals regarding conveyancing, gazumping, surveying and housebuying chains is due to be published during 1999.
Key Note predicts that 1999 will be a difficult year for estate agents. It is unlikely that the market will pick up significantly before 2001. Key Note estimates that both the number of transactions and revenue will continue to increase, reaching 1.48 million and £4.3bn respectively by 2003. However, the number of offices will fall slowly each year, to 12,050 by 2003.
Tenth Edition 1998
Edited by Jenny Baxter
ISBN 1-85765-862-0
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