Estate agents suffer as the property market stagnates - Resolve Group UK

Estate agents suffer as the property market stagnates

Resolve Group UK

Estate agents suffer as the property market stagnates

Housing transactions slipped in June 2018 as the UK’s stagnant property market shows little sign of picking up, according to data recently released by HMRC.

The number of residential property transactions decreased by 3% between May and June, falling to 96,370, whilst house sales completions were 5.7% lower in June this year compared with 2017. Especially worrying as this follows the traditional spring buying season ‘boost’ in house sales.

In the Capital June marked the 16th consecutive month of falling house sales according to a recent survey from the Royal Institute of Chartered Surveyors.

General unease around the economy and results of Brexit are commonly held responsible for discouraging investors, particularly those from abroad.  This downward trajectory makes investment buyers even more wary and lengthens the purchase cycle for those involved who are trying to squeeze the very best deal.

In all likelihood the reasons for this stagnation are multiple but overall there is simply insufficient housing stock available to meet demand.

First time buyers struggle to raise deposits whilst cost remains a key issue for second time buyers as, even aside from unaffordable levels of stamp duty, the high price of property itself in urban areas means many homeowners are opting to either improve or extend their existing properties rather than moving.

The recent Office for National Statistics (ONS) house price index showed house price growth in May slowed to its lowest annual rate in nearly five years. On average house prices across the UK have risen 3% in the year to May 2018, dropping to the lowest yearly rate of growth since August 2013.

Against this background increasing numbers of Estate Agents are reporting difficulties, most notably Countrywide, Britain’s biggest estate agency chain, which last month said it would be seeking new funds through a rights issue to cut its £200m debts by at least half and support its turnaround plan.

Foxtons, another estate agent giant, also reported a 15% decline in revenues during the first quarter of 2018 stating that activity in the London housing market was at historic lows.

Similarly to retailers, High Street Estate Agents are struggling as competition from online services increase. At the same time costs have risen as a result of increased rates on premises and recent changes in employment legislation. Against the backdrop of property market stagnation there will be local areas in which there are just too many Estate Agents with too few properties to market – it seems likely there are difficult times ahead.

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