Estate agent’s profits slashed as economy woes continue
A new study by accounting firm Moore Stephens has found that one in five estate agencies in the UK are feeling the strain of a weakening economy, as industry leaders Countrywide and Foxtons also see profits slump.
Almost 14 months on from the Brexit referendum, and it appears that many of the fears voiced by those in opposition may be coming true.
With a weakening pound forecast to be worth less than €1 by early 2018, the property industry appears to be bearing the brunt of the economic slowdown.
With larger companies such as Countrywide and Foxtons blaming collapses in profits on ‘tough market conditions’, they still have less to fear than smaller chains and independent high-street agencies who are losing out in business to online portals such as Rightmove and Purplebricks who offer cheaper flat-rate prices than the former can afford.
Countrywide itself has found profits to be 98% down versus the same time last year, leading to a huge fall in share prices.
“We’re not optimistic about the housing market in the next half and our mantra has been one of self-help,” said chief executive Alison Platt.
“We cannot sit here and say we will wait for the market to come back because our view is it won’t in the next few years.”
This sentiment has been echoed by others within the housing market as fears grow that the impending exit from the European Union will place the UK at a disadvantage with regards to international trade, possibly leading to a reduction in the number of homeowners willing to sell until the economy recovers.
Moreover, experts believe that due to a lack of new-build homes, first-time buyers will still be unable to join the property ladder, further stagnating an already weak market. This is bad news for current homeowners who, for reasons including work commitments or a growing family, need to sell their house fast and are left with an ever-diminishing pool of available buyers.
Of course, for larger agencies and online portals, the possibility of smaller estate agents and chains closing down will, ultimately, aid their business model in the long-run as competition lessens and they gain greater control over previously hard-to-penetrate market shares.
For the average consumer, however, the feeling of gloom and doom will not be assuaged until a clearer picture develops in relation to the terms of the UK’s exit from the EU.
Can’t sell your home? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.