The pandemic caused a massive contraction of the industry to £11.719bn by 2021 – costing the average estate agent £120,000 in revenue.
But last year there was a complete reversal and the market grew by over 10% to £12.906bn. The number of estate agencies also grew by 2.3%.
Now you might think that economic chaos which occurred in the last quarter of last year would have put the brakes on the recovery of the sector. But, according to Nested, you’d be wrong.
Despite the higher mortgage rates, the cost of living and the general global economic uncertainty, the estate agency sector looks set to grow still further during 2023, to £13.3bn – a 3.2% increase on 2022.
Of course, we’re still some way below our pre-pandemic peak, but, despite the buffeting headwinds, there’s new growth out there with more to come and it’s down to the resilience and determination of those working in the sector allied to this age-old cultural thing we have about the British wanting to own their own home.
‘An Englishman’s home is his castle’ – so the saying goes. But it’s not enough to rent the castle – the Englishman has to buy it!
This is not the universal view. The French aren’t like that; nor are the Germans. Consequently, the property markets operate in different ways and so do the rental markets.
But it is that desire, that fervour, that mission to own the rooves over our heads that drive demand – even when the economic going gets tough.
We’ll deprive ourselves of holidays, nights out, season tickets to the football, flashier cars, more fashionable shoes…..anything – and just to put ourselves in hoc for 25 years in exchange for the right to say we own the four walls that surround us.
And there’s nothing whatsoever wrong with that – except for the fact that there aren’t enough houses to go around. To make matters worse, underlying demand remains high hence, even in the toughest of economic circumstances, medium and long-term forecasts predict yet more rises in house prices.
At the end of January, 2022, average household debt in the UK (excluding student loans) stood at a staggering £63, 582. The total debt for people in Britain was an eyewatering - £1,767.1bn. Most of it fuelled by this commitment to home ownership.
For those on the housing ladder or hoping to be on the housing ladder the post Mini Budget chaos of the Truss/Kwarteng era must have been terrifying.
Thankfully now, some stability has returned and rates are coming down to more manageable levels. Even so, one has to wonder why we don’t increase supply by building more houses to buy or to let.
After all, people have to live somewhere and, clearly, we’re prepared to pay for it.
But it’s getting harder. Smaller landlords have been fleeing the Private Rented Sector for years because of increased costs and a higher tax burden. Already, tenants are queuing up to rent homes as soon as they come on the market and there have been stories of bidding wars over individual properties.
It seems amazing that there is no Government policy strategy to combat this housing crisis. According to research by Heriot Watt university last year, the UK was short by 4 million homes.
Because of political pressure from its own Backbenchers, the Government’s response was to scrap its own house-building target of 300,000 homes per year. And so now we lag even further behind.
Mind you, if you change Housing Ministers more often than you change your Facebook password, maybe it’s no surprise.
Until next time…