The National Association of Property Buyers has said that estate agents are preparing themselves for a difficult few months ahead. A fall in house sales across the whole of the market and rising business costs mean estate agents are beginning to feel the pinch. Many estate agents are expecting the run up to Christmas to be quiet. With a large number having to pay three months of rent on their High Street offices, the next few months are likely to be very challenging.
Which other companies are being affected by the slowdown?
The second phase of the housing slowdown is now upon us and the market is expected to become increasingly challenging with more fall-throughs. The difficult conditions in the market are affecting not just property prices, but also the share price of building companies. LSL Property Services, the second-largest estate agent chain in the United Kingdom, recently issued a stock market update warning. The share price of LSL Property Services tumbled by 11% after it issued a profit warning for the second half of 2022 and reported that housing market conditions had become more difficult than expected. More information on the share prices in this sector can be found in this article by the Guardian.
What else is contributing to the situation?
Rising costs faced by businesses in the sector are contributing to the problem, with the cost of running a branch being higher than it has ever been. Rent and rates have gone up and the rising cost of fuel makes it more expensive to run a car, which estate agents need in order to travel to viewings. Advertising is another major expense and membership fees for property portals are also costly. Rightmove, for example, charges about £25,000 per year for a branch, and this is just one of many similar sites that estate agents want to be featured on.
Even Rightmove’s share price has fallen this year by around 25%, as investors expect sales volumes to decline and the possibility of branches having to close. We are also likely to see struggling agency firms being wound up and liquidated. As property sales become ever scarcer, many estate agents are experiencing a rapid drop in income. The few properties that are selling tend to be those that were brought to market some time ago, when estate agents had slashed fees. The income generated by these sales is, therefore, disappointing and having very little impact on the bottom line.
Property expert Jonathan Rolande said that the next few months will be vital for the property sector. A New Year bounce could re-invigorate the market as the weather gets better and the days get longer. Buyer and lender confidence could hold and the current financial turmoil could ease. Anyone considering buying or selling a property in the Surrey area will doubtless search for the best conveyancing solicitors Guildford, with firms such as Sam Conveyancing, positioned to manage the entire conveyancing process.
However, many in the industry are being reminded of previous long-term retractions and fear this slow-down could be a sign of worse things to come. Rolande commented “It now seems clear that 2023 will be the year of the property price drop. It’s not a matter of if, but when, how fast, and by how much.”
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