Plimsoll’s latest Estate Agents study shows who has the resilience for a prolonged period of lower demand and falling house prices….and which region is most at risk.

The UK's traditional spring house-buying season was lacklustre this year, with repayments on existing mortgages surpassing new loans by £1.4bn in April, the lowest new loan figure since 1993, excluding the lockdown period. The post-pandemic surge in property prices combined with now rising interest rates and a slowing economy, have made it challenging for many new buyers.

House prices have already declined by 3.4%, year on year, marking the largest annual drop since 2009. The subdued activity in the housing market is predicted to continue through this year and into 2024. Analysts forecast a fall of at least 10% in nominal house prices, equating to a real-term drop of over 20% when inflation is factored in.

This decline has been seen as beneficial, countering the UK's mistaken belief that inflation-busting increases in house prices are advantageous. The main beneficiaries of rising house prices are usually wealthier, older individuals, while younger people and renters tend to be disadvantaged.

With a General Election due in 2024, housing is set to become a central dividing issue. The Conservatives may be seen to be supporting existing property owners and have moved away from housebuilding targets. Labour proposes to set housebuilding targets, and push landowners to sell land below potential market prices to deter land hoarding and increase the supply of new homes.

Research by estate agency Nested shows almost 77,500 homes have been sold across England and Wales during 2023. That is 58% fewer than the 171,000 sold during the same time in 2022! The following table, based on the research conducted by Nested, shows the decline by region.

Plimsoll, the UK’s leading market analysts, have produced an interactive study showing how financially stable each of the UK’s leading Estate Agencies is. Our unique analysis will separate those agencies that have the financial stability to weather a prolonged period of depressed demand in the market from those least likely to survive.

The latest Plimsoll Analysis has rated each of the UK 2400 leading Estate Agencies as Strong, Good, Mediocre, Caution or Danger. These ratings reflect the ability of each business to absorb unfavourable trading conditions or external shocks. 545 of the UK’s Estate Agents have been rated as Danger:

Plimsoll’s latest assessment of the sector is designed so those tasked with navigating their Estate Agency through these tough times have decision-ready intelligence at their fingertips. For users of the Plimsoll Analysis, warning signs of agencies in financial difficulty flash much earlier giving advanced warning of trouble ahead. Inversely, the best practices of those getting their performance right can be replicated.

As Nested’s research shows, there is a divergence in performance across the country with the Welsh region showing the joint largest slowdown in property transactions – down 59.8%. However, Plimsoll specialises in revealing how financially stable Estate Agents are across the board. Plimsoll’s latest research shows despite Wales having the greatest dip in house sales in the UK surprisingly Welsh Estate Agents are the rated strongest with 70% rated as Strong whilst also having   the lowest percentage of endangered companies:

The most endangered regions of the UK’s Estate Agency landscape are in London and the North West with 25% and 26% of companies in those regions respectively in financial danger. With sharply lower transactions in these areas could they be set for corporate failure or at least heightened merger activity as regional markets consolidate on lower transactions?

A “Danger” rating from Plimsoll is a proven indicator that a business is flirting with financial failure. Nine out of ten companies currently in administration were rated as Danger by Plimsoll two years prior to their demise. This is an early warning that change is required.

The Plimsoll Analysis provides an instant, comparison analysis of the UK’s 2400 leading Estate Agencies Whether you are charged with the prudent fiscal management of a property business or an investor looking for opportunities amid depressed business valuations, this is a critical tool.

Each leading agency is assessed on its overall financial health, rated on its robustness, and provided with a number of improvements to be made. What is more, Plimsoll also provides concise comparisons so you can instantly separate the weak from the strong.

For more information on the Plimsoll Analysis – Estate Agencies please click here.