Estate agents opening new offices in London, against a backdrop of sharply lower turnover and uncertainty over the general election and property taxes, are like lemmings, according to one of Britain's leading buying agencies.
The latest blog on the website of Property Vision, an independent agency that has been operating in the prime central London and UK country markets for 30 years, says that last week's unscheduled trading statement and profits warning by Foxtons should not have come as a surprise to experienced observers of the housing market in the capital.
Every London agent has been talking about the collapse in turnover and the possibility of redundancies for a few months now says the blog, asking: Is this the canary in the coal mine for the London market Should one draw connecting dots between turnover and prices
Less buyers around typically prompts falling prices but Property Vision insists this does not necessarily mean a collapse.
What it does say is that all estate agents are in trouble. The London boom of the last five years has been responded to by new agents setting up shop and existing agents opening new branches in new areas says the buying firm.
Property Vision says that with greater control of the housing market being passed to, and sought by, the Bank of England, it is unlikely that high demand will return in the near future.
This wasn't too hard to predict - but still the new offices opened to chase turnover. Lemmings come to mind concludes the blog.
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Comments
Wise words Patrick. The reality is, everyone needs a home so there is no such thing as a total collapse in the property market it is just trends therein that ebb and flow like the tide. We actually found that when the recession hit, our company performed at its best, as the 'cowboy' agents that make good money in an easy market failed to deliver when professionalism and knowledge win out over cheap sales techniques. We saw supposedly 'established' agents shut offices, make sizeable redundancies or cease trading all together whilst we were hiring and see both turnover and profits surge. As always, exaggerated drama to get picked up in the press but very little substance to it.
I think that the blogger may need some assistance with how numbers work.
There was no slow down when the recession hit and Sainsbury's opened more 'Local' branches. Price increases are not necessarily conducive to estate agency profits as too are price decreases not directly linked to estate agency profits drops.
I find the comments that every estate agency is predicting a 'collapse' in profits to be inflammatory considering the year before agents were makes historic amounts of profit.
Maybe a return to sensible margins and sustainable profits is more accurate.
Lastly, the most profitable long term scenario for an estate agency is to find an equilibrium between buyers and sellers/tenants and landlords so that turnover in transactions increase.
If you find property prices rising too rapidly it is quite possible, and has be evident in the past few years that people stay put. This is not what estate agency want to experience and so maybe a little turmoil will improve profits in the not so distant future.