KN70002

KEY NOTE ESTATE AGENTS : February 2002

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This report covers: estate agents, residential agencies, property transactions, housing market, house sales, property leasing, property renting, sole agency, joint sole agency, multiple agency, fees, estate agency revenues, new house prices, seasonality, average house prices, buy-to-let, top thirty companies, house ownership, length of time in house, owner-occupier intentions, internet,

Companies covered include: Countrywide Assured Group, The TEAM Association, Halifax Estate Agencies, Royal & Sun Alliance Property Services, BBG Estate Agencies, Your-Move.Co.UK, Spicer Haart, Connell Residential, Reeds Rains, Legal & General Estate Agencies,

EXECUTIVE SUMMARY

This report exmines the UK estate agents market. It focuses on the High-Street residential agencies and excludes property services such as auctioneers, valuers, surveyors, estate managers, property companies and property consultants.

The market showed strong growth between 1995 and 1999, although it has declined a little since then. Key Note estimates that there were 1.42 million property transactions in England, Wales and Scotland at the end of 2001, which represents a fall of 11.8 percent on 2000. Within the same geographical area, total estate agency revenues fell by an estimated 1.3 percent, to £4.61bn. While the majority of agency revenues are generated from commission on property sales, they also comprise financial services income and property management income.

While many corporate bodies, such as Prudential Assurance PLC and Abbey National PLC, have long since left the market, the industry as a whole remains dominated by large estate agencies owned by major PLCs, such as Halifax PLC and Royal & Sun Alliance Insurance Group PLC. The top 14 agencies represent more than a quarter of all estate agency offices in the UK. Nevertheless, there have been changes within this structure. For example, Halifax Estate Agencies reduced its branch network considerably between 1999 and 2002, while Darlows, which was not a corporate estate agency, has gone into receivership. More than half of Darlows' branches were rescued and bought, and some still trade under the Darlows brand name. Franchise estate agencies are growing in number, and the drift to franchising looks to become a trend for the future.

There are three relative newcomers to the market, which are planning to launch nationwide networks. Whether the market can sustain this expansion on top of the existing 12,000 estate agency branches remains to be seen. However, such developments are expected to contribute to changes in the market over the next few years. Property websites and estate agents' own websites are becoming more widespread, although the closure of leading websites that sustained mounting losses surprised many in the industry.

A major issue currently of concern within the market is the proposed Sellers Information Pack, which the Government is expected to make mandatory within the next 2 years (by 2004). While this is intended to protect the interests of house buyers, provision of such packs will be costly for the seller and have an impact on estate agents' businesses.

Changes in the housing market — notably demand and house prices — have a direct impact on estate agents' business. The recent boost in the housing market is forecast to be coming to an end, with supply predicted to exceed demand over the next few years. House prices are expected to remain relatively stable between 2002 and 2005. Key Note forecasts that the number of property transactions will fall slightly in 2002, rising again slowly from 2003 onwards. Similarly, estate agency revenues are expected to remain static in 2002, rising gradually from 2003.

TABLE OF CONTENTS

Text © 2002 Key Note

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Last updated by Amanda Porteous February 2004