By Daniel Thomas, Property Correspondent Published: August 29 2008 13:51 | Last updated: August 29 2008 23:26 As many as 1,300 estate agents’ offices went out of business in the first six months of the year. This number is expected to rise sharply as the downturn in the UK housing market continues to deepen, according to Rightmove, the property website. Rightmove, the UK’s number one property portal, saw a big increase in the number of estate agents leaving the site, which it blamed almost entirely on companies going bust because of the housing downturn. At June 30, the portal had retained 84 per cent of the estate agents it had as clients this time last year, down from a 93 per cent retention rate last year. Rightmove said the housing market was suffering a severe downturn in activity, which it warned was “having serious consequences for many customers”. “A lot of agents have gone, or will be going, out of business, and we do not expect that to change in the next six months,” said Ed Williams, managing director of Rightmove. The portal helped to revolutionise the property sales market when it was launched in 2000 and it sparked a myriad of copycat sites that aimed to capitalise on the housing boom. The website boasts more than 90 per cent of the estate agency market as members and this activity generates about 60 per cent of its revenue. This makes it well-placed to gauge the pain in the transactional market, which has effectively frozen owing to a lack of buyer confidence, predictions of further price falls and restrictive loan terms. The company said it was probable that the remainder of 2008 would see estate agents leaving the industry at higher rates as conditions continue get tougher. It also forecast that 2009 would see a further decrease in the number of estate agents trading. The company increased its bad debt provisions six fold to £600,000, reflecting both non-payment of bills by clients as well as potential future problems among its housebuilder customers. On Friday, the Land Registry revealed the level of transactions in the housing market has almost halved. Sales volumes averaged 59,622 a month between February and May, it said, down from an average of 99,024 in the same period last year. The lack of transactions is having a brutal impact on estate agents, many of whom were set up in the boom period when selling houses appeared to be easy money. Earlier this summer, the Centre for Economics and Business Research estimated that 15,000 estate agency jobs would be lost. This figure is looking increasingly conservative in the wake of recent announcements by leading estate agents. This week, Savills said that it was looking to save about £20m through cost cutting, partly through redundancies in its residential division and by the closure of two offices. This move came after Halifax Estate Agents, part of HBOS, said it would shut more than a quarter of its outlets, making 100 employees redundant in 53 branches. Other companies to cut jobs include Kinleigh Folkard & Hayward and Your Move, and more are expected as conditions in the housing market worsen. Rightmove is positioning its business in order to be more defensive. Overall membership actually rose 5 per cent in the past six months, owing to the continued strength of the lettings market, which has been buoyed by people unable or unwilling to buy new homes. The number of lettings agent members rose 22 per cent in the period. The website has also reported a rise in income from new developments advertising, caused by the glut of new homes coming on to the market that are not being sold as quickly as before. New developments are spending almost twice as long on the site than they did 18 months ago. Unlike estate agents, which pay a set monthly price per office, new developments generate a fee per month for as long as they are being advertised. There was a 60 per cent rise in spending by new homes developers. Given the softening of this sector, Rightmove is focusing its resources on generating listings from Housing Associations, the grant-funded social providers of housing, in order to protect its position against what it described as an “undoubtedly prolonged difficult time for new homes developers”. The company pointed to a 15 per cent rise in page impressions on its website to 3.1bn, which suggests that, although people are no longer buying, the national obsession with house prices is far from over. Owing to the resilience in these areas, Rightmove reported that revenue increased 49 per cent to £37.8m when compared with last year. Pre-tax profits rose to £19.8m from £12.1m in the same period last year. Rightmove increased its interim dividend from 2p to 3p per share.
Rightmove suffers as estate agents fold
Saturday, 30 August 2008
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