“Estate Agencies shut 150 branches a week” screams the headline in the newspaper this morning. ”4000 job losses since the start of the year and the number of mortgages approved for home buyers has fallen by 44% in 12 months” it goes on to say. “The lowest level since records began 15 years ago”.
Hardly a day goes by according to the old joke without The Daily Mail running a headline that links the story of the day with house prices but this was not a headline in The Mail – it was in The Daily Telegraph. Already comments on the Telegraph web site that follow the story suggests that there is little sympathy amongst readers and many point out that they think (as they always do) that rising house prices were the fault of estate agents in sharp suits and that redundancy is too good for them.
I’m always struck by just how insane this logic is. How exactly are estate agents supposed to be responsible? They don’t control supply or demand. They don’t buy properties in sufficient volume to impact on prices and since most are supposed to be thick and ‘on the make’ it’s a mystery how they would have the brains to. If they could make prices move, why would they now be falling? If they could rig the market, why would 4000 have decided to put themselves on the job market since 1st January?
In fact, it’s these figures that look like rubbish to me. Even the math doesn’t add up. 1000 branches closing over 18 weeks does not equal 150 a week. The countries largest agent, Countrywide has shut just 50 out of 1,100 branches since last summer and whilst there are firms who are not renewing leases as they fall in and individual branches closing most firms laid down enough fat in the good times to survive for at least a year rather than folding at the end of the first quarter.
Don’t get me wrong, the market is frantically tough at the moment. New instructions in many areas are down 40% and actually sales down by over 50%. Land Registry figures have been reporting three months behind that they were down by 40% in January and we can only expect this to grow as will the number of repossessions. The number of lots sold in property auctions is also way below usual 85%.
Estate agents may well find that by the Autumn their income has fallen by 50% from last year and at that point many will have let people go and shut unprofitable branches. If another 3000 branches were to have closed by then as these figures suggest then you can expect the new on-line estate agency that Spicer Haart will be launching through Tesco to have an even better chance of succeeding. The countries largest privately owned agency and the the countries largest retailer. What ever they come up with, it’s going to give the agents who survive 2008 a serious run for their money but more of this later.