If you’ve been following events, you’ll know that 2018 has turned out to be something of an “annus horribilis” with profit warnings hitting the share price of the business and a £140m emergency fundraising agreed at its annual general meeting.
Anyone working in the housing market will be aware of the scope of Countrywide’s business and some of the big agency brands it covers – perhaps most notably Hamptons International and Bairstow Eves.
It, of course, remains to be seen how the business might now fare with this cash injection but there’s no doubting that the agency world seems a difficult place to be at present.
Purchase transaction fall
Online agents – particularly the big brand names like Purplebricks – have gone after the traditional high-street operators with some vigour and significant marketing budgets to boot.
That in itself is no guarantee of success because there are some rumblings that a number of online agents are also struggling to get the cut through they would wish for.
The bigger problem of course is around the number of purchase transactions that are available for agents to fight over.
In London, for instance, recent data from London Central Portfolio suggested the number of transactions was down to Credit Crunch levels – in the year to July there had been 88,189 which is 20,000 down from its 2014 peak.
While such drops in activity may not be mirrored all around the country, we suspect that in most regions house purchase activity is down and so it is perhaps no wonder the purchase-reliant agency sector is having difficulties.
So, what might this mean in terms of the future direction of not just estate agency world, but the mortgage advice sector?
Competition will intensify
Well, for the former there’s no doubting that the competition for business is only going to intensify – online agent Yopa raised £20m in funding and those without, at the very least, a hybrid model of high-street and online look likely to struggle.
Diversification might well be the order of the day and it’s possible that mortgage advice could be one area where agents feel they might be able to prosper in.
While advisers will also be dealing with a lower level of purchase transactions, there’s no doubting that we have found succour in the ongoing strength of the remortgage sector.
Meanwhile the recent data on product transfers suggests there is an even bigger market to be targeted here, which is ripe for an intermediary-led solution.
While we would all like to see some government-focused incentives to get purchase activity up, we are certainly not as reliant on this part of the market as agents.
In that sense, we may well see agents looking to develop or enhance their advisory services or links on the basis that if they can get to the client first they may well have the advantage.
Agents will make advice inroads
Competition is always with us and it’s the bedrock on which our market works, however it will be interesting to see how agents tackle their issues and whether they feel they can make inroads into the advisory space.
Back in the day of course, many agents had in-house mortgage advisers but that’s become increasingly rare with many preferring to have introducer links with other firms.
Might they look to beef up these relationships or seek to develop their own propositions? It may well depend on how subdued the purchase market can get, and for how long?
Many are hoping for action on stamp duty in the November Budget in order to provide a much-needed boost – if this isn’t forthcoming then the chances of more action like we’ve seen from Countrywide recently will only increase.
In that case, we might all have to brace ourselves for far greater competition.
