A City analyst has cast doubts as to whether online agents really can disrupt the market.
However, it also warned that high street agents are facing “a very uncertain” time.
Investment platform Hargreaves Lansdown yesterday said that Rightmove and Zoopla would be winners either way – and not be worried by events.
Hargreaves Lansdown emphased that online agent are almost “entirely reliant” on Rightmove and Zoopla – and drew attention to Purplebricks, also claiming that only 3% of house sales are through online players.
It said: “Less than 3% of total property transactions are currently conducted through online or hybrid models, so this is still a very niche market.
“Purplebricks and its competitors are investing heavily in marketing campaigns , and the former should be well funded to finance its growth ambitions, having raised £22.8m in the recent public offering.
“This should support growth in the online market in the near term.
“Whether online players can gain widespread acceptance remains to be seen. Currently, only the most price-conscious consumers are taking the plunge.
“As the concept gains familiarity, more people may consider this option, wondering why they are handing over thousands in fees to agents who will simply list their property on Rightmove and Zoopla.
“There is little loyalty towards the existing High Street agents, which creates a favourable backdrop for the likes of Purplebricks to change consumer behaviour.
“Success for Purplebricks is by no means assured, even if the online market grows. In time, it will probably face greater competition from existing players and new entrants looking to muscle in on the action.
“The traditional agents are unlikely to sit back and watch their market share be whittled away, meaning we could end up with more ‘clicks and mortar’ operators, combining High Street and online operations.
“Connells, the second largest estate agent, recently acquired Hatched, one of the pioneers of the online estate agency model. This could be a sign of things to come.
“Whichever way you look at it, the High Street agents are facing a very uncertain time.
“If online players grow to occupy a large slice of the market, the traditional operators could be forced to reduce prices and/or change the way they operate.”
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Comments (6)
H’mm is it sinking in why agents need to reconsider the future with RM & Z?
Given some of the comments seen on here, apparently not!
“Hargreaves Lansdown emphased that online agent are almost “entirely reliant” on Rightmove and Zoopla…..”
So true.
“As the concept gains familiarity, more people may consider this option, wondering why they are handing over thousands in fees to agents who will simply list their property on Rightmove and Zoopla”
H’mm is it sinking in why agents need to reconsider the future with RM & Z?
“A City analyst has cast doubts as to whether online agents really can disrupt the market.”
Wot I bin sayin 4 ever !
They have no disruptive tech, no idea how to disrupt the market, no local market presence and unable to manage vendor/buyer sales competently.
I said in the 1980’s I’ll retire from this business the day a computer can do my job.
I will have to retire in the next 10 years in any event. right now I give it 50/50 at the very best they will have come close in 2025
Very innacurate as even traditional agents are online. So its more likely that 80% of sales are done via online search away from FS boards etc.
Online should be read as ‘online only’.
Saying that because you have a (generally rubbish) website you’re also online betrays a lack of understanding of what the internet (and mobile) are and the experiences they enable.
Have a read of this to understand what an online business is: https://stratechery.com/2016/the-fang-playbook/
On reading this, you’ll also realise that the threat isn’t from purplebricks and emoov, it’s from Rightmove and Zoopla, as outlined by the analyst from HL.
The biggest threat to high street agents is that they don’t have an ongoing relationship with their customer. They could do, if they looked at services like Homeshift.
Also, you have to consider that online agents are not profitable, whereas even the smallest high street agents are. Hence why there’s a long tail of poor high street agents that can stay in business, because the process of selling a home is so full of fear, that it’s worth spending 2% on getting someone else (anyone else?!) to do it for you.
I’m going to end on a controversial note: this is why OnTheMarket/Agents’ Mutual is so important for high street agents. With this collective effort you have an opportunity to build a platform that isn’t just tech, but a standard. Agents’ Mutual can do what the Realtor organisation in the US has done so well (and what the NAEA has embarrassingly failed to do): keep members in check and keep the wolf from the door.
Very fair and accurate analysis I would say…refreshing