What could happen to the property market and estate agency?
Anthony Codling, now heading up property firm Twindig, is forecasting a fall in transactions from 66,000 a month to 26,400.
Other analysts are forecasting greater falls, of 80% or more, and Codling himself is saying that the drop could be well over 60%.
Codling, former CEO of Rummage4Property and analyst at Jefferies, said: “You’ve got to be desperate to move, so transactions could fall more than during the credit crunch when they fell by more than 60%.
“That’s going to be a big problem for estate agents.”
According to Jefferies, the stock market is already pricing in a 12% fall in house prices but yesterday’s Mail on Sunday conjectured a 20% decrease, potentially trapping some home owners in negative equity.
The paper also reports buyers shelving viewings and people putting off plans to move.
The Sunday Telegraph estimates that there are some 25,000 estate agency business employing around 170,000, now going into “virtual hibernation due to the coronavirus crisis”.
The paper quotes Mark Hayward, CEO of the NAEA, who describes the industry in “siege mentality”.
He said that the industry has “no business and huge bills to pay by the end of the month, with VAT and rents on top of business rates”.
Hayward says that the association, together with Propertymark sister organisation ARLA, is continuing to lobby the Government “because the only people paying business rates on the high street are estate agents and lawyers”.
He said that with a typical three-month pipeline of business, the peak of distress for agents is likely to be in late May or early June.
The paper also quotes Capital Economics, predicting a 40% slump in transactions during the second quarter of this year.
Based on China’s experience, economist Hansen Lu says that sales were effectively zero for three weeks, and then down 50% after seven weeks.
He said that things might not be quite so bad for the UK but warned of “continued weakness after that as well”.
Meanwhile online agent Doorsteps has said that it has seen its own business come to near collapse this month with a 77% decrease in sales agreed.
It said that between the beginning of March and last Thursday, there was a 51% decrease in daily bookings for viewings.
In the first week of March there were 63 sales, made up of 11 in London and 52 outside London. It was averaging nine sales a day.
Last week there were seven sales agreed altogether, including just one in London.
Mike DelPrete said that the drop in transactions will be severe, and it will take “many months” for volumes to return.
He also warned agents that “virtual tours won’t save your business”.
He said: “Virtual tours won’t stop the decline [in transactions].
“They are no replacement for an actual in-home visit. If transaction volumes drop by 80% or more, no amount of virtual tours or clever online outreach will make up for that decline.”
He offered little advice to agents, saying: “It’s nearly impossible to pivot to a new business model during an economy-shuttering pandemic.
“The alternative strategy is to weather the storm – cryogenically freeze yourself – ready to emerge when the recovery begins.”
Recruitment specialist Josh Rayner, of Rayner Personnel, yesterday said that 75% of agency job vacancies have been pulled.
He said: “A lot of businesses are looking at how they’re going to survive the next few months.”
Comments (25)
Kill off Rightmove – its killed us!!!
If you want your estate agency business then you need to act TODAY!!!
Grab your bank statement and go through all costs – if you can’t afford to stay afloat remove all items not required, cancel all direct debits and get into a payment agreement suppliers afterwards. I know its harsh but this is the only way you can survive.
Ask yourself, if you was opening your business today under current market conditions what you would do – then follow that plan.
Most agencies were struggling pre CV.
And YES!!!! – get your ar** off Rightmove and cancel that direct debit today. RM has fu**** us over the years and played us against each other.
Who or what is Twindig? Anthony Codling has left his CEO position at rummage4property (is that live yet?), to start another property portal. Do we not have enough?
An 80% drop in transaction numbers could well be shy of the true figure for the coming three months. Only the very strongest and those with access to significant cash reserves will survive.
This is a terrible period, worse than the last crash, but the agency landscape also has an opportunity to change when we emerge from this.
Putting passion and personal feelings to one side.
Are we better off cancelling RM or taking the 4 months 75% discount?
I am not interested in other portals at this time or the debate around it. This is from a financial viewpoint only and the ramifications it may have coming off and then rejoining.
…assuming, that is, that you would want to/feel the need to rejoin?
This is a challenging time but we have to stay positive and focus on getting through this..
If your decision is to shut up shop then you will definitely not sell anything. Currently i do not think that is the right decision for my agency. Of course we are following all of the government recommendations and guidelines and when we are told to close the doors we will. We will then work remotely.
We consulted all of our vendors and the vast majority wanted us to try and sell their homes if we could in a safe manner ( vacant house, gloves, nothing touched, etc ).
On Saturday we sale agreed a handful of deals, and this morning we have multiple offers on several properties.
We can get through this!!
Was enjoying the article until they spoiled it by quoting DelPrat. ‘He offered little advice to agents’ – good!
Challenging times, Challenging decisions, Government advice, Changing picture daily.
Taking all these factors and many more, each business owner will arrive at their decision, also working with staff, owners, potential clients.
My business remains open virtually with rigorous procedures in place. If/when it needs to shut down, we will comply. In the meantime we plot our way around what we can with safety paramount. Timewasters are not in the picture (choose your own definition).
Smaller businesses like mine, at present, can operate, however every decision is carefully made, through me.
It’s immensely challenging however when I’m told by the Government to do something I do, and we are doing plenty more besides.
It’s unique in most of our lifetimes. I wish everyone out there a safe future for you, your loved ones, your community. We will emerge from this, it will be tough, however we are tough as well.
The whole situation is madness.
Shut everything down now and mothball your business…….
Just do lettings from home – there will be no sales, none, during lockdown and for none for at least two months afterwards.
With respect, J1 – the action you are recommending will only serve to cast your prophecy in stone.
It’s bad enough that those not involved in our industry – have never sat at the coalface – are making predictions that will no doubt affect the decisions of some, thereby buttering the toast in their favour.
There is no doubt that transactions will fall – that is a given. And numbers will take time to return when the crisis ends.
But a total stop? I, for one, don’t think so.
Business will be done – I firmly believe that. And business already done will need preserving.
And let’s not forget that there are infinite opportunities to build relationships to win future business.
PB; I am happy with your response; and I understand the sentiment and respect your points.
I cannot see how you are going to sell a house if your cannot leave yours……..
The people of our land are not respecting the advice given to stay indoors so the government will act – mirroring other countries.
Rather than being a doom-monger I am challenging those that think this serves as an “opportunity”….. realism is important at this time.
Maintaining relationships and running your lettings book is vital.
To suggest only a dip in sales is not realistic for those without experience…..
Hi J1. Thanks for the response, to which I respond accordingly
“I cannot see how you are going to sell a house if your cannot leave yours……..”
Same can be said for lettings, surely? Simply replace “sell” with “rent”.
“To suggest only a dip in sales is not realistic for those without experience…..”
I never suggested a ‘dip’, so I take it you are referring to the article headline. But with regard to ‘experience’ – show me a single person in the Estate Agency industry – any industry, for that matter – who can draw on “experience” of anything like what we are now facing. 2008? Doesn’t hold a candle to what 2020 most likely has in store for us.
But I would suggest that we risk underestimating the variables too easily – those variables being the buyers… sellers… tenants and landlords that will in the main still want business to be done…
…and who I believe will remember those Agents who maintained an effort to meet their hopes and aspirations when all this is done.
This is new territory, J1. Neither you nor I know what is coming – and neither of us knows the answer when it comes.
Maybe it’s somewhere in the middle. It usually is!
I’ll hope for that.
The reference to dip may as well be Peter Brookes Johnson’s blip – yes it is the headline I was refering to PeeBee.
Clients require support and they will get that from us.
Interestingly though if we tell them nothing is going to sell, they will just withdraw……
Asking them to stick with us so we don’t disappear is just as important.
Telling them not to withdraw may also help to preserve market prices; as if there is a wholesale “reset” the price drops may will be potentially catastrophic……….
Okay… now you’ve confused me!
Shut down like you said at 08:11, or keep plugging at it as you now seem to be saying per 09:42?
I take it the coffee kicked in after the first post… ;o)
I think I am confusing myself today….
By mothballing I failed to elude to doing the minimum – keep rentals moving forward, manage the sold pipeline and maintain some sort of social media presence, but after that look after my people as best I can and …….
Mothball the cost base,,,,,,,,,,,,
Have had five coffees already – now its 12:28 it might be time for a pint, but I cant get one anywhere…….
PeeBee is spot on. The cryogenic freeze approach is just a sci-fi version of head-in-the-sand. Maintaining a pipeline will be vital for survival. Sure, Smart Viewing alone may not cure the virus – but it is one of the tools that the industry should be utilising for keeping pipeline momentum. Codling says ‘you’ve got to be desperate to move’ – so isn’t it our job to help those who have to move to get through the process? J1 & Del Prete should read the letter from Simon Shnerock of Choices to take a masterclass in leadership and compassion and then try practising it.
Hi Mark
How one deals with one’s staff is not necessarily reflected in one’s posts on PIE….. please don’t assume that…..
All Govt tax receipts can be put on hold – Call HMRC on 0800 015 9559. Be prepared to wait.
It took a friend 3 hours but on Friday she ageed:
>> PAYE & NI 1 month delay
>> only pay 15% of this month’s VAT bill with 85% deferred 3 months
>> 3 month delay in Corp Tax.
Clearly this is a fluid situation – this was last week, might be different this week.
If you’ve got the money to pay I’d pay all of it. To find the 85% of the VAT bill in 3 months is going to be much harder
Hayward says VAT to pay along with rent and rates, If they have VAT to pay it’s because they have sales completed which is good news plus you can reclaim all the vat paid on your purchases but if you have no money to pay the VAT then you were in trouble a lot earlier than when this trouble came along.
Good luck to all of you as this is the toughest time I have known in my 34 years as an agent.
Starting to wonder if it might be 90%-95% after all, lock down is lock down.
Can’t value, can’t list, can’t view = can’t buy.
Scary times.
I have spoken/interacted remotely with around 50 agents this weekend – every diary is empty
Most worrying
Good luck all; we could do with a bit right now…………
Giving notice to RM today. Any company with a 78% profit margin needs to seriously start looking at itself as the majority of other companies in its sector will either close or get significantly smaller. I’ve got a 3 month pipeline (at the moment depending on how many aborted sales we get this week) luckily paid the VAT and this months PAYE but that’s it. Our industry is probably looking at Nil new business in the next 4/5 weeks. There’s going to be mergers and collapses all over the place if costs aren’t cut significantly
I’m coming off Rightmove for good, the market is going to change and take a long time to recover, after this. And I’ve decided to stick with OnTheMarket, before all this coronavirus, we were getting more leads through on the OnTheMarket than Rightmove. I have not spoken to a rep in years from Rightmove before this crisis happened. Yes I’ve paid top whack monthly subscription. For a company I personally couldn’t stand. It’s going against my human nature to pay for something I don’t like. So now is my opportunity to finish with them for good which I will do. And I hope you all do as well.
Good luck to all of you Business wise, lets hope we make it through.