Agents facing ‘difficult few months’ as property market dips – claim

Estate agency branches are bracing themselves for “a very difficult few months,” the National Association of Property Buyers (NAPB) claims.

The NAPB suggests agents are increasingly “feeling the pinch” due to a drop in house sales across the property market and rising business costs.

Spokesman Jonathan Rolande highlighted LSL Property Services’ recent stock market update that warned of a challenging market and increased fall-throughs.

Rolande said: “Phase two of the housing slowdown has now certainly arrived. 

“The reality of harsher property market conditions is beginning to affect not just property prices, but the price of shares in property building companies across the sector as well. 

“For some time we have seen housebuilder share prices dropping due to the consequences of the market and the cladding scandal. 

"Now this is sadly extending into estate agent branches who are most certainly feeling the pinch.  

“Many are expecting a leaner run up to Christmas, made worse by the fact a high number now have to pay three-month’s rent on their High St offices. It’s likely to be a very difficult few months for many.” 

LSL’s share price fell by 12.8% to 230p following its update on Friday and is now hovering at around 230p.

Rolande said part of the problem faced by LSL - and others - could be linked to the rising costs those in the sector now face.

He said: “The cost of running a branch, with the possible exception of wages, is higher than ever right now.

“Rent, rates, running cars which estate agents need for viewings, advertising and the cost of property portals take huge chunks off the bottom line. 

“Rightmove alone will usually charge around £25,000 a year per branch and there are a number of other similar sites that agents feel they must be on, escalating costs further. 

“But even Rightmove's share price is down a quarter this year. Investors are clearly predicting a reduction in sales volumes and perhaps, branch closures. Worse still, the liquidation of failing agency firms is likely to come. 

“Many agents have seen their incomes drop already as sales become scarcer. Those properties that are selling were often taken to market some time ago when there was immense pressure to slash fees, so even those sales are generating disappointing income levels for the firms.”

Predicting what he thinks will happen next, Rolande added: “The next few months will be vital for the property sector. 

“The recent financial turmoil could pass and the New Year may well bring a re-invigorated market that improves steadily as the weather improves and the days lengthen. But for many industry insiders, this latest slow-down brings back unhappy memories of the build-up to more serious and longer-term retractions.”