Property Transactions Decline

This report examines UK estate agents and their principal market: the sale, leasing and renting of residential property. The definition of estate agents in this report excludes estate managers, surveyors, valuers, auctioneers, property companies, property consultants and other professionals or organisations that provide specialist property services.

It is estimated that there were 1.4 million property transactions in the UK in 2004 -- a 10% decline on the figure for 2003. Total estate agency revenue is estimated at GBP 5.27bn in 2004, compared with GBP 5.46bn in 2003. Most of this revenue came from property sales, but estate agents also earned income from mortgage and insurance sales, lettings and property management, and valuations and surveys.

There are several important issues in this sector in 2005. Mortgage loans Firstly, the market is growing weaker. Property is selling more slowly, vendors are delaying putting their homes on the market and the average margin between a property's asking price and the price that buyers are actually willing to pay is widening. The first 3 months of 2005 were awful for most estate agents, with sales volumes sharply down on the same period in 2004. Secondly, buy-to-let purchasers have become much more cautious and some are even leaving the sector. Thirdly, in the midst of this weakening market, franchised estate agencies appear to be strengthening their position. Franchising has become much more popular as a way of developing in this sector.

Finally, there is the controversy over the Home Information Pack (HIP), which the Government plans to make compulsory for all sellers in England and Wales. The National Association of Estate Agents (NAEA) is deeply unhappy with the HIP, which is to be launched as a pilot scheme in 2006 and made mandatory in 2007. It fears that the scheme's cost and time implications will have a damaging effect on the market and could even force some estate agents out of business.

In mid-2005, industry experts were in disagreement about the immediate future of the market. The NAEA and some building societies were reasonably optimistic, but some leading estate agencies were predicting a dire 2005 and a poor 2006. It is forecast that the number of property transactions will decline by 15% in 2005, while estate agency revenue will fall by 9.1%. The market is unlikely to recover before 2008.

Companies mentioned in the report include:

- Countrywide Estate Agents

- The TEAM Association

- Connells Residential

- Halifax Estate Agencies Ltd

- Your-Move.co.uk Ltd

- Spicerhaart Group Ltd

- Reeds Rains Ltd

- Arun Estate Agencies Ltd

- Kinleigh Folkard & Hayward Ltd

- Winkworth Franchising Ltd

- Your-move.co.uk Ltd

For more information visit http://www.researchandmarkets.com/reports/c27297