| KN70003 |
| KEY NOTE ESTATE AGENTS : March 2003 |
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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 Associates, Halifax Estate Agents, Sequence (UK), Your-Move.CoUK, Bradford & Bingley, TMX Corporation, Connells Residential, Reeds Rains,Arun,Estate Agents, role of the corporates, franchise of affiliated operations, average house prices by UK region,
EXECUTIVE SUMMARY
In examining the UK market for estate agents, this report concentrates on the high-street residential agencies. It excludes other property services, such as auctioneers, valuers, estate managers, property companies and property consultants.
Buoyed up by property price rises, the estate agency market has been growing steadily since the mid-1990s. Key Note estimates that there were 1.8 million property transactions in the UK in 2002, an increase of 8.6 percent on 2001. In the same year, total estate agency revenues increased by an estimated 18.1 percent, to £5.54bn. Agency revenues include financial services and property management income, as well as commission from the sale of property. However, the vast majority of estate agents' revenue - 72.9 percent in 2002 - still comes from sales of residential property.
Large estate agency chains still dominate the industry and many of these are owned by major companies. Of the top ten agencies, seven are owned by large public companies. However, the total number of branches owned by the major chains has been falling as they have sought to cut costs and increase profitability. The major estate agency groups include Countrywide Assured Group PLC, Halifax Estate Agencies Ltd, Sequence (UK) Ltd and Bradford & Bingley Estate Agency. The principal change among the chains of agencies is that Countrywide Assured has bought Friends Provident's estate agencies, which makes it an even larger player. The next key development is likely to be the sale of Sequence (UK) Ltd by its owner Royal & Sun Alliance Group PLC.
Although the market has been booming, it has faced many problems. The various and conflicting house price surveys has caused some concern and, as a result, an official house price index might be launched in 2003. Estate agents continue to suffer from a poor public image, partly as a result of a number of high-profile prosecutions and partly because of consumers' perceptions of the service they give and whether or not it represents good value for money. In addition, agents are struggling with a more competitive market in which pressure on commission fees has increased, reducing profitability in many cases.
The industry still has concerns about the proposed launch of a Seller's Information Pack, which would be part of the new Housing Act that is expected to be passed during 2003. While the Pack has been welcomed by the Consumers' Association, it will be costly to prepare.
As more and more property seekers and sellers use the Internet as a source of information, so more estate agents are being encouraged to take advantage of the Internet themselves. There are now eight major property portals, which are receiving a growing number of visitors.
Key Note believes that the property market will slacken in 2003, and, therefore, forecasts a reduction in property transactions and a decline in estate agency revenues. This trend is expected to continue into 2004, with the first signs of recovery becoming evident in 2005
TABLE OF CONTENTS
| 1. Market Definition 7 |
| REPORT COVERAGE 7 |
| MARKET SECTORS 7 |
| Table 1: Number of Agents Involved and Typical Fee by Type of Agency Agreement (number and percent), 2002 7 |
| Sole Agency Agreements 8 |
| Joint Sole Agency Agreements 8 |
| Multiple Agency Agreements 8 |
| SOURCES OF REVENUE 8 |
| Table 2: Estimated Breakdown of Total Estate Agency Revenues in the UK ( percent), 2002 9 |
| MARKET TRENDS 9 |
| New House Prices 9 |
| Table 3: Index of New House Prices at Current Prices (index 1993=100), 1993-2002 10 |
| Pressure on Fees 10 |
| Seasonality 10 |
| Table 4: Seasonality of Estate Agency Business in England and Wales (000 transactions and percent), 2001 and 2002 11 |
| MARKET POSITION 11 |
| The UK 11 |
| Overseas 12 |
| 2. Market Size 13 |
| THE TOTAL MARKET 13 |
| By Volume 13 |
| Property Transactions 13 |
| Table 5: Property Market Transactions in the UK by Region (000), 1998-2002 13 |
| By Value 14 |
| Estate Agency Revenues 14 |
| Table 6: Estimated Total Estate Agency Revenues in the UK (£m), 2002 14 |
| NEW HOUSING 15 |
| By Value 15 |
| Table 7: Value of New Housing in Great Britain (£m), 1998-2002 15 |
| By Volume 16 |
| Table 8: Number of Permanent Dwellings Completed in the UK by Region, 1997-2001 16 |
| BUY-TO-LET PURCHASING 16 |
| AUCTIONS 17 |
| 3. Industry Background 18 |
| RECENT HISTORY 18 |
| NUMBER OF ESTATE AGENCY OFFICES 18 |
| Table 9: Estimated Number of Estate Agency Offices in the UK, 1998-2002 19 |
| INDUSTRY CONCENTRATION 19 |
| The Role of the Corporates 19 |
| The Sale of Friends Provident Estate Agents 19 |
| Franchise and Affiliated Operations 20 |
| Table 10: The UK's Largest Affinity Groups and Franchise Operations (number of branches), January 2000-2003 20 |
| EMPLOYMENT 21 |
| REGIONAL VARIATIONS IN THE MARKETPLACE 21 |
| House Prices 21 |
| Table 11: Average House Prices at Mortgage Completion Stage by UK Region (£), Third Quarter 2001 and 2002 21 |
| DISTRIBUTION 22 |
| HOW ROBUST IS THE MARKET? 23 |
| LEGISLATION 24 |
| Stop Now Order 24 |
| KEY TRADE ASSOCIATIONS 24 |
| Incorporated Society of Auctioneers and Valuers 24 |
| Independent Association of Estate Agents 24 |
| National Association of Estate Agents 25 |
| Ombudsman for Estate Agents 25 |
| Royal Institution of Chartered Surveyors 25 |
| 4. Competitor Analysis 26 |
| THE MARKETPLACE 26 |
| Table 12: The Leading Top 30 Estate Agencies by Number of Residential Branches, January 2000-2003 26 |
| MARKET LEADERS 28 |
| Countrywide Assured Group PLC 28 |
| Company Structure 28 |
| Current and Future Developments 28 |
| Financial Results 28 |
| The TEAM Association 29 |
| Company Structure 29 |
| Current and Future Developments 29 |
| Financial Results 29 |
| Halifax Estate Agencies Ltd 29 |
| Company Structure 29 |
| Current and Future Developments 30 |
| Financial Results 30 |
| Sequence (UK) Ltd 30 |
| Company Structure 30 |
| Current and Future Developments 30 |
| Financial Results 30 |
| Your-Move.Co.UK Ltd 30 |
| Company Structure 30 |
| Current and Future Developments 31 |
| Financial Results 31 |
| Bradford & Bingley Estate Agency 31 |
| Company Structure 31 |
| Current and Future Developments 31 |
| Financial Results 31 |
| TMX Corporation Ltd 32 |
| Company Structure 32 |
| Current and Future Developments 32 |
| Financial Results 32 |
| Connells Residential 32 |
| Company Structure 32 |
| Current and Future Developments 32 |
| Financial Results 32 |
| Reeds Rains Ltd 33 |
| Company Structure 33 |
| Current and Future Developments 33 |
| Financial Results 33 |
| Arun Estate Agencies Ltd 33 |
| Company Structure 33 |
| Current and Future Developments 33 |
| Financial Results 33 |
| OUTSIDE SUPPLIERS 34 |
| ADVERTISING AND PROMOTION 34 |
| Table 13: Main Media Advertising Expenditure by Estate Agents (£000), Years Ending September 2001 and 2002 35 |
| 5. Strengths, Weaknesses, Opportunities and Threats 36 |
| STRENGTHS 36 |
| WEAKNESSES 36 |
| OPPORTUNITIES 36 |
| THREATS 36 |
| 6. Buying Behaviour 38 |
| FACTORS INFLUENCING HOUSE PURCHASING 38 |
| HOME OWNERSHIP 38 |
| Table 14: Home Ownership in Great Britain ( percent of adults), 2001 and 2002 39 |
| Table 15: Length of Time in Present Home ( percent of adults), 2001 and 2002 40 |
| HOUSEBUYING INTENTIONS 40 |
| Table 16: percentage of Adults Who Would Like to be in Owner Occupation in 2 Years' Time by Age, 1997-2001 41 |
| Table 17: percentage of Adults Who Would Like to be in Owner Occupation in 10 Years' Time, 1997-2001 41 |
| 7. Current Issues 42 |
| MARKET CONDITIONS 42 |
| THE LURE OF FRANCHISING 42 |
| WHAT CAN ESTATE AGENTS DO ABOUT THEIR IMAGE? 43 |
| BOOSTING THE OMBUDSMAN 44 |
| SURVEYING THE SURVEYS 44 |
| legislative changes 45 |
| The Seller's Information Pack 45 |
| New Housing Act 46 |
| Land Registration Act 46 |
| 8. The Global Market 47 |
| EUROPE 47 |
| Table 18: Owner Occupation in Europe by Country ( percent of adults living in owner-occupied property), 1998 47 |
| GLOBAL ESTATE AGENCIES 48 |
| RE/MAX 48 |
| ERA Great Britain 48 |
| International Consortium of Real Estate Associations 48 |
| 9. Forecasts 49 |
| INTRODUCTION 49 |
| Economic Forecasts 49 |
| FORECASTS 2003 TO 2007 50 |
| By Volume 50 |
| Property Transactions 50 |
| Table 19: Forecast Property Market Transactions in the UK (000), 2003-2007 50 |
| By Value 50 |
| Estate Agency Revenue 50 |
| Table 20: Forecast Estate Agency Revenues in the UK (£m), 2003-2007 51 |
| FUTURE TRENDS 51 |
| Property Prices 51 |
| The Office Of Fair Trading Inquiry 52 |
| Do We Need an Estate Agents' Charter? 52 |
| The Council of Mortgage Lenders' Scenario of the Future 53 |
| 10. Company Profiles 54 |
| Arun Estate Agencies Ltd 55 |
| Connells Residential 57 |
| Countrywide Assured Group Plc 59 |
| Halifax Estate Agencies Ltd 61 |
| Reeds Rains Ltd 63 |
| TMX CORPORATION Ltd 65 |
| Your-move.co.uk Ltd 67 |
| 11. Further Sources 69 |
| Associations 69 |
| Publications 69 |
| General Sources 70 |
| Bonnier Information Sources 70 |
| Government Publications 71 |
| Other Sources 72 |
Text © 2004 Key Note
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Last updated by Amanda Porteous February 2004
