Market reports, business information and market research - Midnight Croquet. MAPS Estate Agents and Services

Changing focus of estate agents

How is the business of residential estate agency changing? This market assessment looks at the trends affecting estate agency and examines how the leading chains are shaping up to the challenges of the future. By 'estate agent', Key Note means a business primarily concerned with selling and/or letting residential property. Many estate agents have other business strands, such as selling mortgages and insurance, or property development, or property management, which are increasingly important. This report discusses these additional businesses, but the starting point is those businesses that were established to handle property transactions.

More people, little land, dearer property

Demographic trends point to an increase in retirement developments and greater use of equity release. More dwellings will be needed to keep pace with the population rise resulting from greater longevity and from the continuing trend towards smaller households. The current rate of construction of new dwellings is insufficient, both to accommodate new households and to replace the stock of unfit housing. This shortfall will push property values upwards. It is not a simple matter for housebuilders to complete more dwellings. Under-supply enables them to keep their prices up and, in any case, there is a dearth of land with planning permission for residential development.

Poor public perceptions

Key Note has commissioned new research, from NOP Solutions, on the public's attitudes to estate agents, their use of estate agents and their views on the housing market. The findings show that estate agents are not overwhelmingly popular. Fractionally over half of all adults would expect to find a home through an estate agent — suggesting that half would seek to bypass an agent, if they were thinking of buying a home. Only one in seven people think that staff in estate agents are knowledgeable and fewer than one in 20 think that estate agents' fees are good value for money. Key Note's survey finding, that people are not wildly enthusiastic about estate agents, fits in with previous research. The estate agency sector still has a big task ahead of it, to convince the public that staff are knowledgeable and efficient, and provide a service that is well worth the fees charged.

The Internet has quickly become a major force in property sales, catering for private sellers, agents and developers. Nearly a quarter of all our interviewees say that the Internet is a good place to look for a property.

Finance for the future

Web marketing is becoming integrated with branch sales, as stand-alone independent sites struggle in a crowded marketplace. The stress factor involved in property transactions is a big factor in favour of estate agents' branches. When people buy a home, they often need personal support. They are also in the market for all sorts of financial and household services — as the leading chains are well aware. Financial services are the way ahead.

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Executive Summary	1
Changing focus of estate agents	1
More people, little land, dearer property	1
Poor public perceptions	1
Finance for the future	2
1. Introduction	3
The topic	3
Objectives	3
Methodology	3
Original research	3
Definition	4
2. Strategic Overview	5
UK housing in a nutshell	5
Table 1: Dwellings in England by Type and Construction Date ( percent), 2001	5
Table 2: Approximate Number of Dwellings in England by Type and Construction Date (000), 2001	6
Demographics and property	7
Table 3: Population Change in the UK (million), 1901-2026	7
Table 4: Actual and Forecast Ratios of Over-60s to All Others in the UK Population, 1996-2026	8
Table 5: UK Population Projections (000), 1996-2026	9
Table 6: Estimated Numbers of Additional Households in the UK (000), 1996 and 2006 10	10
The rise of the estate agent	11
Table 7: Estimated Numbers of Estate Agents’ Offices,† 1988-2001	11
How affordable is residential property?	12
Table 8: Average Weekly Household Expenditure on Property† in the UK (£ per week), 1999/2000	13
Figure 1: Average Weekly Household Expenditure on Property† in the UK (£ per week), 1999/2000	14
Regional factors	15
Table 9: Mix-Adjusted Property Prices in the UK (£), 1969 and 2000	17
Table 10: Regional Variations in the Ratio of Incomes to Dwelling’ Prices (£ and percent), Second Quarter of 2000	18
Table 11: Number of Years of Household Disposable Earnings Needed to Buy an Average Property in England and Wales, 2000	19
Why do people move home?	20
Table 12: Main Reasons for Moving Home in England ( percent of all who moved), 1999/2000	20
Table 13: Estimated Numbers of Households in England that Have Moved, by Main Reasons for Moving (000), 1999/2000	22
Where estate agents’ income comes from	23
Table 14: Estimated Revenue of Residential Estate Agents (£m and percent), 2000	24
Figure 2: Estimated Revenue of Residential Estate Agents ( percent), 2000	24
3. Promotion Issues	26
Table 15: Brand Advertising by Residential Estate Agents Spending Over £200,000 (£000), 2000	26
Table 16: Brand Advertising by Residential Estate Agents Spending Over £200,000 (£000), 1st April 2000 to 31st March 2001	27
Table 17: Brand Advertising by Internet Estate Agents (£000), 2000	28
Table 18: Brand Advertising by Internet Estate Agents† (£000), 1st April 2000 to 31st March 2001	29
Table 19: Brand Advertising by Homebuilders† (£000), 2000	30
Table 20: Brand Advertising by Homebuilders†, 1st April 2000 to 31st March 2001	31
4. An International Perspective	32
5. PEST Analysis	33
Political	33
Economic	34
Social	34
Technological	35
6. Consumer Dynamics	36
Table 21: Proportion of Adults Agreeing with Individual Statements about Estate Agents ( percent respondents), April 2001	36
Table 22: Expecting to Use an Estate Agent and Preferring Property Prices to be Lower ( percent respondents), 2001	38
Table 23: Preference for a Complete Home-Buying Service, and Likely Use of a Sole Agency ( percent of respondents), 2001	40
Table 24: Likely Use of Joint or Multiple Agencies and Views on Estate Agents Managing Let Property ( percent of respondents), 2001	42
Table 25: Looking for Property on the Internet and Views on Estate Agency Staff ( percent of respondents), 2001	45
Table 26: Selling and Buying Property Without an Estate Agent ( percent of respondents), 2001	47
Table 27: Intention to Buy a Home and Opinion of Estate Agents’ Fees ( percent of respondents), 2001	49
Table 28: High Property Prices — Good for the Economy? and Support for Higher Property Prices ( percent of respondents), 2001	51
Table 29: Who are the Private Landlords? ( percent of respondents), 2001	52
7. Company Profiles	55
Table 30: Estimates of Leading Estate Agency Chains in the UK, 2001	56
Asserta Home	56
Corporate Strategy	56
Advertising/Distribution	57
Future Developments	57
BBG Estate Agencies	57
Corporate Strategy	57
Advertising/Distribution	57
Profitability	58
Future Developments	58
Cendant/Move	58
Corporate Strategy	58
Advertising/Distribution	59
Future Developments	59
CGNU	59
Corporate Strategy/Profitability	59
Advertising/Distribution	59
Future Developments	59
Chancellors	60
Corporate Strategy/Profitability	60
Future Developments	60
Chesterton International	60
Corporate Strategy/Advertising/Distribution	60
Profitability	60
Future Developments	61
Cluttons	61
Corporate Strategy/Advertising/Distribution	61
Future Developments	61
Connell Residential	61
Corporate Strategy	61
Advertising/Distribution	61
Profitability	61
Future Developments	62
Countrywide Assured	62
Corporate Strategy	62
Advertising/Distribution	62
Table 31: Countrywide’s Financial Performance (£m), 1996 and 2000	63
Future Developments	63
Darlows	63
Corporate Strategy/Profitability	63
Advertising/Distribution	63
Future Developments	64
DTZ Holdings	64
Corporate Strategy/Advertising/Distribution	64
Profitability	64
Table 32: DTZ’s Financial Performance (£m), 1996 and 2000	64
Future Developments	65
Easier	65
Corporate Strategy/Advertising/Distribution	65
Profitability	65
Future Developments	65
First Property Online	65
Corporate Strategy/Advertising/Distribution	65
Profitability	66
Future Developments	66
Fletcher King	66
Corporate Strategy/Advertising/Distribution	66
Profitability	66
Table 33: Fletcher King’s Financial Performance (£m), 1996 and 2000	66
Future Developments	67
Foxtons	67
Corporate Strategy/Advertising/Distribution	67
Profitability	67
Future Developments	67
Friends Provident	67
Corporate Strategy/Profitability	67
Advertising/Distribution	68
Future Developments	68
Goadsby & Harding	68
Corporate Strategy/Advertising/Distribution	68
Profitability	68
Future Developments	69
Halifax Estate Agencies	69
Corporate Strategy/Advertising/Distribution	69
Profitability	69
Table 34: Halifax’s Financial Performance (£m), 1996 and 2000	69
Future Developments	69
Knight Frank	70
Corporate Strategy/Advertising/Distribution	70
Profitability	70
Future Developments	70
Legal & General	70
Corporate Strategy/Advertising/Distribution	70
Profitability	71
Table 35: Legal & General Group’s Financial Performance (£m), 1996 and 2000	71
Future Developments	71
Peter Alan	71
Corporate Strategy/Advertising/Distribution	71
Profitability	71
Future Developments	72
Primelocation	72
Corporate Strategy/Advertising/Distribution	72
Future Developments	72
Property finder	72
Corporate Strategy/Advertising/Distribution	72
Future Developments	72
Reeds Rains	72
Corporate Strategy	72
Advertising/Distribution	73
Future Developments	73
Rightmove	73
Corporate Strategy/Advertising/Distribution	73
Future Developments	73
Royal & Sun Alliance Property Services	73
Corporate Strategy	73
Advertising/Distribution	74
Profitability	74
Table 36: Royal & Sun Alliance’s Financial Performance (£m), 1996 and 2000	74
Future Developments	74
Savills	75
Corporate Strategy	75
Advertising/Distribution	75
Profitability	75
Future Developments	75
Stags	75
Corporate Strategy/Advertising/Distribution	75
Future Company Developments	76
TEAM	76
Corporate Strategy/Advertising/Distribution	76
Future Developments	76
Thisislondon	76
Corporate Strategy/Advertising/Distribution	76
Future Company Developments	76
TMX Corporation (Spicer haart)	77
Corporate Strategy	77
Advertising/Distribution	77
Future Developments	77
Woolley & Wallis	77
Corporate Strategy/Advertising/Distribution	77
Future Company Developments	77
8. The Future	78
Property prospects Bright overall	78
London: the exclusion problem	78
Regional hot spots: agents seeking properties	78
Table 37: Expected Population in Major Population Growth Areas within England (000), 1998 and 2008	79
Trouble for estate agents in zones of decline	80
Table 38: Expected Population in Major Population Decline Areas within England (000), 1998 and 2008	80
Shortage of land for new prestige homes	81
Developers’ direct sales set to grow	81
Integrated route for online marketing	82
Property management — a growth opportunity	83
Life in financial services yet	84
That personal touch	85
Two scenarios for the housing market	85
Scenario 1: Continued Uncertainty about Joining the Euro	85
Scenario 2: Interest Rates Remain Low	86
Placed to prosper?	86
9. Glossary	88
10. Further Sources	90
Associations	90
Estate Agency Companies	91
Marketing and National Press/Other Published Sources	94
Government and Official Sources	95
Bonnier Information Sources	96
Government Publications	97
Other Sources	97
Key Note Research	99
The Key Note Range of Reports	100