Estate Agent armageddon

In Estate Agent Today there is a report from the CML (Council of Mortgage Lenders) indicating that housing transaction levels in the UK will fall to 840,000 this year from a peak of 901,000 in 2008. On the face of it, a 61,000 drop is no small sum and some in the media and property industry have seized on this News (some with glee and others with terror) as proof of the end of the housing market and estate agents in particular. But is it really agent Armageddon?

Whenever we look at National housing figures the numbers always give a few people the willies; not least of all because there is no hard and fast accurate data that everyone can agree on and, the figures involved are so massive. They are also too often taken at face value without recognising the intensely local element to the real housing market that affects every one of us. So when a 61,000 drop in sales volumes is announced, it is hardly surprising that some believe the end of property sales as we know it has been visited upon us. But lets just look at the figures from an agents point of view.

There are between 12,000 and 16,000 agents in the UK at present. 12,000 is the usual industry estimate and 16,000 is a quick ‘back of an envelope’ extrapolation from the Ombudsman Scheme for Property and The Property Ombudsman scheme’s membership figures plus, a soupçon of Rightmove’s member figures thrown in for taste.

If we average the number of all sales in the UK across the two estimated total numbers of agents, we see that in the good times of 2008 the average agent could expect to complete on between 56 and 75 property sales per annum (dependent on whether there are 12,000 or 16,000 agents in the UK). However, this year, with sales volumes being apparently hacked at by the four horsemen of the Apocalypse down to just 840,000 completions; an average agent can only expect to sell between 52.5 and 70 properties! Err, hang on, that’s just between 3.5 and 5 less house sales over a year per agent. Hardly end of the world stuff eh?

Okay, so these figures aren’t exactly high-end accountancy level calculations and they ignore the fact that not all sales go through agents (although around 96% do) or, that house values have dipped a little thereby affecting average commission levels but, unless I have just made a massive wally of myself, I do believe they show that the headline figures are not something agents or the public should panic about.

A good agent will easily be able to offset a 6.7% drop in volume sales by increasing his market share and/ or adding value to his service (that’s increasing his fees in estate agency speak). The good agents will also ensure that those customers who want to sell, will sell and, at a better price than with the agent who doesn’t know what they are doing and believes that dropping your asking price or telling prospective buyers what the lowest price you will take, is the only way to sell a property. Yes a good agent may charge a little more (usually no more than between 0-0.5% more ‘though) but the difference in achieved sale price, reduced stress levels and other factors is well worth it; just ask someone whose experienced a bad agent!

Good luck and, don’t panic; people still need to move home for all the usual reasons and houses are still selling 😉 Chris

Estate Agent Today link http://www.estateagenttoday.co.uk/news_features/Transactions-to-drop-further-this-year

About Chris Wood: Chris is an estate agent with over 25 years of property experience and is based in Penzance and Helston, West Cornwall. He has worked with all sizes and types of businesses from single office independents to the management team and board of RBS and Tesco. A former President Elect of the NAEA and board member of NFoPP until he resigned in 2009, Chris has always championed the highest professional standards for estate agents in the UK. No stranger to the media, he has appeared on various programs including BBC, News 24, ITV, independent and BBC radio and is a regular contributor to trade journals, local and national Newspapers. Chris is on LinkedIn  Ecademy Facebook and Twitter Married to Amanda, he lives in Penzance with their children who are slowly flying the nest, his two dogs and his elderly Uncle. In his spare time; Chris likes to keep fit and is a long-standing member of the Territorial Army. He is currently mobilised for a tour of duty in Afghanistan with 1 Rifles as part of 3 Commando Brigade.

2 comments

  • Number Cruncher

    Your numbers are all wrong, as I’m sure you know.

    In 2008 12k agents made 75 sales each = 900k
    OR 16k agents made 56 sales each = 900k (896k)

    Today you are saying there are only 840k closures/sales or a 7% drop.

    This link (from Jennet Siebrits Head of Residential Research at CB Richard Ellis) http://planetproperty.wordpress.com/2011/06/03/uk-housing-market-abnormalsince-2005/
    will show you that 2007 figures were closer to 1.8 million with a long term average of 1.2 million.

    So, your figures of 900k are 25% below the LTA and 50% below the 2007/08 peak.

    • I don’t claim to be a mathematician and if my figures are wrong, I will re-check them however, may I offer the following response to your comment?
      The transaction figures used were taken directly from the EAT website, reporting the CML figures. The higher figures I used were taken from 2008, as stated, not 2007 which the report you refer to uses. Although I refer to the problems caused by the variance of agreed statistics within the property market (a problem widely reported in the trade and National press recently) at the start of my blog nor, do I use the 2007 figures you quote; a quick check on the Land Registry site for the year 2007 gives a total sales volume of 1,083,033 sales not the 1.8 Million you have used in your argument. LR data taken from: http://www.housepricecrash.co.uk/indices-land-registry-national-monthly.php

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