A cull of agencies is “inevitable” as the industry landscape changes, a leading industry figure has said.
Consultant and trainer Michael Day says that his prophecy, made in EYE a year ago, that there would be “blood on the carpet” is coming true.
Writing on his own site, Day says there will be more closures and fire sale disposals to come.
He said a recent report that 7,000 estate agency offices are under financial pressure probably equates to 25% to 30% of the industry.
He said: “The traditional high street operators are suffering particularly due to their high operating costs, which are largely fixed, and they are often very conservative (small c) about embracing change.
“Transactional sale volumes have been steady in recent years at around 1.25m transactions but, when one removes new homes sales which have been artificially bolstered by Government incentives such as Help to Buy, the numbers in the second hand market have reduced and are estimated to be down a further 8% in 2018 over the same period in 2017.
“Lettings activity remains strong but the market appears to be shrinking as a number of landlords are choosing to exit based on greater regulation and potentially reducing yields.”
Day said: “A cull of weaker and inefficient agencies is inevitable and may allow the cake to be sliced a little more generously amongst those who survive.
“Good planning and positive action is needed to mitigate the downsides and take advantage of the opportunities that are still there, if a little harder to find and exploit.
“I expect to see big changes within the property portals too. Rightmove’s current subscription model does not look sustainable and UBS have recently suggested investors should sell rather than buy.
“Zoopla has been acquired by Silver Lake and will, no doubt, see changes although they are more diverse as a business than Rightmove with software and other services.
“Consequently they may be better placed to capitalise and build on change.
“On The Market is growing (albeit by giving the service away free to new agents) and, with pressures on agency costs, may start to do damage to Rightmove and Zoopla if it can achieve significant listing inventory and public recognition.”