Several press releases from various corners of the property spectrum this week make for some pretty diverse property industry news. Or maybe it’s not all so unrelated …?
From an overall perspective, two stories – both dated January 14th, stand out: the first being the announcement from the National Association of Estate Agents that December 2010 saw the lowest number of property sales for eight years. Of course, Christmas and the weather conditions had something to do with it, but for every seven properties sold in November, only four changed hands in December.
On the same day a joint report by the Mortgage Advice Bureau and broker Coreco Group stated that home loan approvals in 2010 fell to 1.2 million from 1.3 million in 2009. A drop in mortgages granted of over 7%.
Hardly the most inspiring news to kick off the New Year, so let’s move on to something completely different but, as we’ll see, not completely unrelated.
Tower Hamlets Council has cracked down on illegal for sale and sold boards by writing warning letters to all local property firms. These illegal signs being the numerous boards that are left up long after a property has sold or let or indeed boards that are erected spuriously as nothing other than ‘fly posters’.
And then trade publication Estate Agent Today tells us of a raging war between two rival agents up the road in Bushey, Hertfordshire. Imagine Estate Agents advertising themselves as ‘The Number One local agent’ or such like. Their competitors, Clarets, then successfully complain to the Advertising Standards Authority and so Imagine produce another ad berating Clarets for their approach. Within the ad however, they refer to their adversary as ‘…the most unpleasant little reptile have ever had the misfortune to cross swords with..’ and a ‘…horrible little weasel.’ Nice.
So what do these little stories have to do with the big picture?
With transaction levels now down to 575,000 a year – half those seen in the property heyday of 2006/7, when house sales had been rising for the previous decade – saying the property market has weakened is somewhat of an understatement. This is not good news for the thousands of estate agencies that sprang up in High Streets up and down the country. You know the ones – you see the shopfront and think “I’ll just pop in for a quick Pinot Grigio” only to find it’s not the winebar it looks like at all. When there was a turnover of one home in sixteen being bought and sold every year, there was some justification for putting up all those bijou faux-winebar shopfronts. But now that turnover’s dropped to just one in thirty properties per year, what used to be good-natured competition between agencies is starting to turn into out and out warfare. And with good reason: with more than twelve thousand agencies fighting each other for any of the very few commissions available these days, things have started to get rough.
The combination of low sales versus too many estate agency branches is causing ever more stress amongst the shiny suits who, evidently, are fly posting, publicly squabbling and God knows what else in what for many are survival tactics plain and simple. Desperate measures in desperate times.
Unless the market picks itself back up again, and fast, we’ll be seeing more and more of that kind of story. But could there be an alternative? Very possibly. When record stock levels are priced out of reach of fewer buyers who might not be able to get a mortgage anyway, the old model of multiple offices paying ever-increasing rental charges while charging their customers percentage-related commissions is starting to fail. One alternative has worked for other High Street businesses, from travel agencies to supermarkets, so there’s no reason it shouldn’t work for estate agents. It’s time they took their business online.
And why shouldn’t it work for estate agents? Operating on the internet is a lot less expensive than renting a High Street office that looks more like a winebar from the outside, and that can only benefit both housebuyers and estate agents. They might even pop back into their old office at the end of a busy day for some Chablis and canaps … because – with any luck – it’ll now be a real wine bar.
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