Estate agency revenue set for 27% drop

Estate agency sales revenue could have dropped by as much as 27% by the end of this year, research suggests.

Analysis of sales transactions for this year suggests lower volumes and prices could push down revenue for agents.

Online agent Nested looked at Land Registry residential sales data and claims the level of transactions is trending down this year compared with 2021’s figure of 1.1m.

The extrapolated outcome for 2022 is likely to reach just 773,722 sales, a reduction of 31.6%.

The brand worked out that based on an agency fee of 1.18% and 21,139 businesses in 2021, along with an average house price of £258,586, the total value to agencies would be £3.4bn or £163,293 per firm.

But based on a forecast of 773,722 sales this year and 21,619 estate agency businesses and an average sale price of £283,564, the total commission figure would be £2.5bn and falls by 26.7% to £119,752.

Alice Bullard, managing director of Nested, said: “Our research suggests a meaningful fall in revenue for agents but let’s not be too alarmed by this return to a more balanced market whereby a reduction in buyer numbers begins to meet seller numbers for the first time in a while.

“We’ve all become used to sky-high demand fuelled by low mortgage rates far outstripping supply yet this simply means that those of us that have seen cyclicality like this before will return to ‘old school’ agency methods in order to thrive.

“Some individual agents will be looking at their individual pipelines now though and wondering if they have less to lose by changing roles.

“The former comfort of a fat forward number of sold subject to contracts may have been the reason to stay in their role until recently whereas with less to hold them back they may be tempted to see how much greener the grass is elsewhere in the industry and the first half of the year is the perfect time to start building your pipeline.”

Pipeline and estimated total value of sales per agency business
	Period	Est number of transactions / sales vol	UK average house price (given year)	Est total value of transactions / sales £	Est number of estate agent businesses n	Est average fee % (exc VAT)	Est value per sale to agency £	Est total value to agencies £	Est total value per agency business £
	2021	1,131,268	£258,586	£292,530,067,048	21,139	1.18%	£3,051	£3,451,854,791	£163,293
	2022 est	773,722	£283,564	£219,399,705,208	21,619	1.18%	£3,346	£2,588,916,521	£119,752

								Change %	-26.7%