New research has shown that one in five high street estate agents are at risk of going out of business.
The accountancy firm Moore Stephens has said that nearly 5,000 estate agents are showing signs of “financial distress” and are struggling to compete with fixed-fee online agents.
“Traditional high street estate agents’ profit margins are being squeezed from both sides, from cut-price online competitors to their larger counterparts on the high street who are forcing them to up their spending or give up the race.” said Mike Finch of Moore Stephens.
“Many areas across the UK are over-saturated with estate agents, and competition is becoming too much for some smaller businesses.”
The UK’s biggest listed estate agency, Countrywide (LON:CWD), has reported that pre-tax profits for the six months to June were only £447,000. This was £24.3 million down from the same period last year.
Profits at Foxtons (LON:FOXT) also tumbled in the first half of 2017 as the group blamed “unprecedented” economic and political uncertainty affecting the property market.Foxtons; said revenue fell 15% to £58.5 million in the six months to June 30, with pre-tax profit plummeting 64% from £10.5 million to £3.8 million.
Foxtons said that their revenue fell by 15 percent in the first half of the year, with pre-tax profit sliding 64 percent to £3.8 million.
Chief Executive Nic Budden has said the London market was “severely impacted” by Brexit, which he said had led to a “substantial reduction in property sales transactions”.
“The continued softness in the retail property market shows no sign of abating. Retailers are shunning and shutting bricks and mortar shops,” said Liam Brooke of Lendy, who provides property finance and development loans.
“The government needs to find a way to encourage retailers to give the high streets a face lift. Big brands are continuing to shift their focus towards their online services.”