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EXECUTIVE SUMMARY

This report examines the estate agency industry and concentrates on the High Street residential agencies. It excludes specialised property services such as auctioneers, valuers, estate managers, property companies and consultants.

The estate agency industry has been booming since the start of 1998, and both demand and property prices are high. Key Note estimates that, by the end of 2000, the number of property transactions in England and Wales will have reached 1.44 million — which is marginally less than in 1999, when the figure stood at 1.46 million. The total number of transactions in the whole of the UK for 2000 will probably be 1.55 million according to Key Note estimates.

Total estate agency revenues for England and Wales in 1999 were an estimated £3.92bn and for the whole of the UK just over £4bn. For 2000, the figure for estate agency revenue in England and Wales is likely to be £4.18bn and for the whole of the UK £4.26bn. Between the end of 1997 and the end of 1999, estate agency revenue for England and Wales rose by 39.4 percent and it will have increased again by 6.6 percent by the end of 2000.

The estate agency industry has changed considerably since 1997, and has altered to an even greater extent since the early 1990s. The major change has been the steady withdrawal by the large financial institutions from the market. Since 1997, Woolwich PLC has pulled out completely from estate agency, as has Lloyds Bank Group PLC. Halifax PLC has sold off or closed 224 of its estate agency branches, although it still remains an important force in the market. Prior to 1997, other large companies left the market, including Prudential Assurance PLC, Abbey National PLC, Nationwide Building Society and Alliance & Leicester Building Society.

The industry is still dominated by several large players such as Countrywide Assured PLC, Royal & Sun Alliance PLC, Halifax PLC and Bradford & Bingley, but a number of associations and affinity groups are also playing a bigger part. At the same time, the share of the market by the independents remains high, at around 60 percent — although that figure includes independent estate agents that are members of nationwide affinity groups.

The three major issues facing the industry now are: the Ombudsman for Estate Agents scheme, which is intended to protect house buyers from unethical agents; the Sellers’ Information Pack, which puts the onus on the vendor to supply details of a property as soon as it is put on the market; and the Internet, which is being increasingly exploited by financial institutions, newspaper publishers and other groups to list properties for sale, in direct competition with estate agents and offering little or no commission. Key Note forecasts that the property market will start to fall in 2001 and that this decline will last until 2004. Estate agency revenues will also fall, to well below the £4bn mark. Key Note expects revenues to pick up in 2004 and beyond.

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Last updated by Jacob van Eldik 20th July 2000