12 Oct RIP Estate Agents?
RIP Estate Agents?
As we move ever closer toward hopefully securing a deal on leaving the EU, were are seeing the market in some areas grinding to a halt. So what does this mean for your local agent? In a slow and difficult market, we can see estate agents struggle and sometimes go out of business. We take a look at how some of the big agents are performing and also what things are looking like over the coming months.
The biggest news of the last quarter is that we say the giant that is countywide needed an emergency £140m bailout to keep them afloat in August. With debts reaching the £200m mark is no wonder there were crisis talks. We saw their shares come crashing down after a decision was made to place 1 billion shares at 10p when they normally sit at 50p. You might not have heard of Countrywide themselves but they own some of the biggest estate agents in the country such as Bairstow Eves and Hamptons as well as employing thousands of people.
After the funding was announced we saw the share price drop by 80%, valuing the company at just £76m.The private equity firm Oaktree Capital will buy shares worth £24m to try and raise more funds. It seems that Countrywide is taking this serious as last week they cancelled bonuses for the top bosses at the request of the disgruntled investors. Countrywide are predicting their profits for the 1st half will be £20m shorter than the previous year.
Why is there a lack of for sale signs?
2018 has seen the lowest amount of houses going onto the market in over a decade accord to The Halifax. We are seeing house hunters been left with fewer and fewer stock to choose from but with the lack of stock, we have seen prices increase. House price rose by roughly 2.5% in September this year taking the average to above £225000. Although this is positive for those looking for a sell house fast service we see that its still on a downward trend as prices rose 3.7% in August. So for those of you looking to sell house fast, is now the right time?
The fact that mortgage rates are low and there are more people in work sees that demand is still high. However, with the uncertainty of Brexit and the wages being squeezed we aren’t quite seeing the increases we expect.
“September is a month that normally sees a burst of activity as people return from holiday and go back to work. So a fall of this scale is quite a retreat,” said Lucy Pendleton, founder director of independent estate agents James Pendleton.
“The concern is that legions of Brits didn’t get back from holiday and head straight out again to the estate agent like they normally do. The back to work bounce is nowhere to be seen.”
25% of agents are in distress
We have seen more than 7000 UK high street estate agents are showing some signs of financial distress amidst the lower sales and increasing competition from those online based firms that offer a sell house fast service.
A report from the accountants Moore Stephens suggestion that just over a quarter of agents are struggling to survive in recent times. This they state is mainly caused by a decline in long-term property sales. Over the past three years we have seen a drop of 20% in London alone and the UK as a whole we have seen a 1% drop.
It’s not all doom and gloom as we see agents such as Purplebricks and Emoov taking a positive level of growth, however, it is more than likely that this is the contributing factor to failings of many other high street agents.
“Insolvencies of High Street estate agents are increasing as online competitors continue to chip away at their sales and undermine commission rates,” said Chris Marsden partner at Moore Stephens.
“Some areas in the UK appear to have an excess capacity of estate agents, which could mean there is not enough business to spread around as property transactions stagnate.”
Agents may struggle even further as next year there may be plans to ban letting fees to tenants – expected to come in early next year.
It’s not just Countrywide who have hit problems we have seen chain Foxtons has also had problems in 2018. We have seen a 15% decline across the first quarter of 2018. Sue to this they have seen their share price fall by as much as 25%.
If you have any subjects that you would like us to research then give us a call on a member of our sell house fast team on 0800 612 1366.