How The UK Housing Market Is Affecting Estate Agents
Published on: 30/08/2018
With house prices struggling for growth, interest rate worries possibly dampening demand and the ongoing dearth of property coming onto the market, it’s certainly going to be an “interesting” 12 months for UK Estate Agents.
Looking ahead to see which of the UK’s top 1500 Estate Agents are in good health and which are already struggling, Plimsoll’s latest analysis of the market has found:
- 29% of the market is making a loss
- 27% have been rated as Danger
- 42% remain Strong
- Sales growth has fallen to -1.9%
- Profit margins have fallen to an average 1.6%
Christopher Evans, Senior Analyst at Plimsoll says, “Affordability issues, interest rate rises, falling demand, lack of houses to sell. The news just seems to be constantly gloomy for the UK’s leading Estate Agents. With that in mind, let’s start with some good news. We have rated 42% of companies as STRONG. Their financial health is such that they are the ones that should be most able to ride out any turbulence in the coming months”.
“Regionally, the South, where house prices are much higher, have the highest proportion of Estate Agents that are in good financial health with 46%. Elsewhere, the North East has the lowest percentage of financially strong companies at just 34%. With it being the cheapest UK region, where you’d expect the highest turnover of property and lower running costs this was a major surprise”.
So, what about the bad news? Evans explains, “There are many sub plots happening across the regions. As mentioned, the south has its large share of Strong companies but it is also one of the regions with the highest proportion of Agents in financial difficulty. Clearly the market in the southern England is highly polarized between success and failure”.
“Elsewhere, as well as having the lowest number of Strong companies, sadly the North East also has the highest percentage of companies in Danger. Is this a symptom of too many companies chasing too little of a low-margin market? Whatever the reason, the region is highly vulnerable to future shocks in the housing market”