Newsletter - January 2008
Time to take stock
15 January 2008
Estate agent YOUR MOVE, part of the LSL Property Services group, announced last week that they would be closing 12 branches in response to the recent market slowdown. It’s the first sign that major changes could need to be made to the structure of the industry. movewithus directors Robin and Sean King reflect on the current market and what it’s going to take for successful agents to survive.
Robin King commented: “Market volumes will be down on last year’s at 900,000 transactions and are likely to remain at this level for the next 18 months. At the moment, there are simply too many agents to be maintained by these volumes of sales. If current conditions continue, many larger groups will consolidate through mergers and acquisitions - less effective agents will close and more proactive agents will continue in business.”
Analysis of the market
The last quarter of 2007 has been described by some as the ‘perfect storm’ for the residential property market. The credit crunch, the run on Northern Rock and the introduction of Home Information Packs threw the market into a confused state. Despite this, some confidence has been restored with the bank rate reduction in December and Halifax reporting 5.2% house inflation year on year, effectively wiping off the falls of the previous three months. With on-market and sold pipelines depleted, how should you plan your recovery in these opening months of the year?
What agents need to do to stay ahead
Robin King says: “Firstly, agents need to be honest with vendors about price expectations. Overpricing homes doesn’t do anyone any favours and neither agents nor vendors want homes languishing at the back of their drawers and not selling. It costs the agent money to manage and maintain and puts strain on the vendor. Secondly, agents need to qualify buyers before arranging viewings. Do they have the credit to purchase? What’s their motivation for buying? There’s no point arranging a viewing for a buyer who is unlikely to purchase. Not only does it waste your time but it undermines the vendor’s confidence in your abilities if there are multiple viewings with no offers. Thirdly, know your market. Think about the price ranges for your market and the properties that are likely to sell.”
Predictions for the future
movewithus has been making great strides with its clients and plans to deliver over 5000 instructions to its agency partners in 2008. Stocks have increased by 43% in the last quarter, ensuring that member agents have a plentiful supply of saleable property. Secure Home Purchase has now started and has been a key to growing instruction levels.
Sean King added: “Market volumes are likely to be at 900,000 transactions per annum for the next 18 months. New home premiums will remain under pressure as the “ladder movers” are no longer able to leverage on house price gains. Therefore, market confidence will be patchy with overall price stagnation masking market black spots in the more marginal areas. However, once we have accepted these as external conditions, we can set about ensuring our partners continue to thrive”.
Strong, well managed independent offices are now showing signs of winning through, with the movewithus MEG members fairing particularly well. We’re planning to launch a number of other initiatives throughout the year in support of our developer clients and member agents to ensure a continued healthy stock turnover.
