Press Release Summary = This Market Assessment report looks at how the leading residential estate-agency chains are shaping up to the challenges of the future.
Press Release Body = Estate Agents and Services Market Assessment 2006
This Market Assessment report looks at how the leading residential estate-agency chains are shaping up to the challenges of the future. The main objectives are to examine the structure of the residential estate-agency business sector in the UK, investigate the impact that trends in society, the economy and technology are having on the structure of residential estate agency, and to suggest likely changes in the estate-agency sector.
Sales and acquisitions had a significant impact on the leaders in UK estate agency between 2001 and 2006. Friends Provident\'s estate-agency business was sold to the market leader, Countrywide, in September 2002. In October 2004, Countrywide purchased Bradford & Bingley\'s chain of estate agencies. The insurer Aviva sold its Your Move estate agencies in July 2004 to Lending Solutions, funded by Barclays Private Equity. Lending Solutions acquired control of Reeds Rains in 2005. Royal & SunAlliance sold its estate agencies to the Skipton Building Society\'s Connells in October 2003.
There are around 11,800 estate-agency offices in the UK, approximately 10,800 of which are in England and Wales. There are four main categories: national agents selling and letting exclusive, expensive properties; mass-market national agents (headed by the three largest - Countrywide, Connells and Lending Solutions with Your Move and Reeds Rains); mass-market regional agents; and smaller independents. Affinity groups and franchise organisations cater well for the smaller businesses. Four of the five leading groups see franchising as their best way ahead.
The rise of buy-to-let has greatly increased the demand for property lettings specialists. The Association of Residential Letting Agents (ARLA) has a crucial role in raising professional standards in the lettings sector. Around 1,500 offices are affiliated to ARLA. Buy-to-let landlords are building portfolios. In December 2005, more owned three to five properties than either one or two.
From 1st June 2007, vendors will have to provide potential purchasers with a Home Information Pack. The introduction of the Packs could stop the trend towards direct vendor-to-purchaser sales, because of the new responsibilities placed on vendors. The regime will favour large companies that can employ full-time Home Condition Inspectors.
Local agents are still very important in the property sales and letting markets. Property websites and portals give independent local agents national visibility and help the independents to remain a strong force in estate agency. Internet portals are objects of intense commercial competition, although there is an emerging problem of insufficiently distinct branding among the large number of property websites. Media groups are buying up the leading property portals: Propertyfinder, Findaproperty, Primelocation and Fish4 Homes are all part of media conglomerates. However, the market-leading site, Rightmove, remains under the control of estate agents Countrywide, Connells and Halifax.
Advertising data suggest that promotion of properties overseas - notably in Spain - has become very important in the UK.
However, ownership of holiday homes several hundred miles from the UK will be less attractive as higher oil prices force up the cost of flying. Far-away homes will be worthwhile investments only if there is effective local demand. More UK buyers will look for holiday homes nearer home. France, the second most popular choice for UK buyers after Spain, would be a major beneficiary of such a change. Oversupply in Spain is taking the property market off the boil there.
The peak ages for engaging an agent are surprisingly young, at 25 to 44. In the 35 to 44 age band, nearly three respondents in every ten in Key Note\'s survey for this report (conducted by NEMS Market Research) had appointed an estate agent between 1999 and 2006. However, a majority of survey respondents thought that estate agents\' standard of service was let down by a failure to vet potential buyers properly, and fewer than a third said that agents\' services were good value.
Demographic trends point to an increase in retirement developments and greater use of equity release, for which estate agents could adopt advisory as well as commercial roles.
In the estate-agency business itself, the retreat of financial-services companies from the operational aspects of estate agency is a continuing trend. Four big financial groups - Bradford & Bingley, Aviva, Royal & SunAlliance and Friends Provident - have exited traditional estate agency since 2002. The only financial-services groups retaining direct control over large chains of estate agents are the Skipton Building Society and the Halifax.
Franchising is an important current trend. The market-leading group Countrywide is growing through franchising. Lending Solutions and Halifax are seeking franchisees and licensees, respectively. Spicerhaart also intends to follow the franchise route. Over the next 5 years (to 2011), franchising is likely to be the main growth engine for estate-agency businesses. The advance of franchising extends to lettings agents. The desirability balance between home ownership and renting is beginning to change in favour of renting. Letting agents and private landlords could have a critical role in the provision of new social housing.
Diversified property groups, encompassing international property development, financing, surveying, sales, rentals and property management, are assuming greater importance in the estate-agency sector. If, in the future, Tesco or another mega-retailer takes the plunge into estate agency at a low commission rate, the impact will be felt throughout the sector and many small firms will fall by the wayside. At the end of April 2006, ASDA announced a 6-month trial selling homes in north east England.
2022
