A City investment consultancy says one leading private agency chain has slashed its fees to 0.5 per cent in order to build up instructions in what some fear will be a lean period between now and the EU referendum.
Jefferies made the reference while issuing a cautious note to investors following Countrywide’s bullish trading statement yesterday; Countrywide reported that its house sales were up 30 per cent in the first quarter of 2016.
Many agents have shown similarly strong sales growth benefitting - as Countrywide has already stated in its case - from an acceleration of buy to let transactions ahead of April's stamp duty tax changes.
However, in both Jefferies’ note to its investment clients and in Countrywide’s statement, there is concern at the unknown effect of economic uncertainty in the build-up to June’s EU referendum, or possibly after the vote.
In addition, Jefferies’ analyst Anthony Codling says: “Price competition remains strong and we are aware that one of the private majors has been cutting fee rates to around 0.5% in order to firm up a pipeline ahead of the EU referendum. Countrywide remains disciplined on fees.” There is no hint as to the identity of the agency.
Codling also notes that Countrywide’s trading statement to the City yesterday was shorter than usual - another sign, he says, that the second quarter of the year may be less promising than the first.
“We would not be surprised to learn that one of the reasons Countrywide has trimmed its trading update disclosures is to reduce the risks of analysts extrapolating Q1 performance across the full year” he suggests, adding: “We did find [the] trading update somewhat brief and somewhat short on numbers, although Countrywide disclosures are in-line with their peers (which we also find too brief for our liking...).”
Alison Platt, Countrywide’s chief executive, said she was “encouraged by the strong performance delivered in the first quarter” and remains on track to deliver the pilot project - previously revealed by Estate Agent Today - in three of the groups’ different agency brands during the second quarter of this year.