Are estate agents recession proof?
You may or may not have seen some numbers I ran for Deidre Hipwell of The Times article yesterday on estate agents. Now you would think that with a recession and house price crash that the number of estate agent ‘shops’ would have declined. The reality is that they have overall increased marginally over the last few years. Anecdotal evidence and conversations that I have had will say that the change comes in terms of estate agents as people rather than as ‘shops’. Whilst their shops stayed open (a key marketing space) the number of agents reduced behind the windows of property particulars.
The number of estate agents (excludes letting agents) is nearly 13,000, which is more than the number of Post Offices we have, more than the number of betting shops and even more than the number of charity shops! With declining values until recently and fierce competition on fees (typically 1% for many) you do wonder how many of these estate agents windows have managed to survive such a torrid time whilst many of their neighbouring shops went out of business years ago. Being lean, mean and keen must be key to survival.
Also of note is that nearly 8,000 of these estate agent windows are independents (<5 units) whilst Your Move is the largest chain with nearly 300 shops.
The picture of growth is not universal across all areas, as you should expect by now when you see LDC data. The largest number (5,500) exist in London and the South East and have grown by 2% and 1% respectively in the last 12 months off the back of a very strong market. Surprising to some might be that Wales has also experienced 2% growth in estate agent shops in the last 12 months whilst the South West and North East have declined by 1% each.
In light of the sheer numbers there are many towns (and I mean many) where there are double-digit numbers of estate agents. The hot spots quoted in The Times piece were Enfield, Croydon, Orpington, Thornton Heath, Pinner, Romford, Ilford, Eastbourne and Canterbury who have all experienced rises of 10 per cent in the number of estate agents. With such numbers the big question is do they clusters as many other retailers and leisure operators do – the most controversial being betting shops. The answer is that in many cases then yes and the above towns are no exception. Below is an image of the estate agents in Ilford where there are 30 no less!
So estate agents are alive, well and growing to a volume, which dwarfs many other high street occupiers. Whilst the internet was seen as a key threat to estate agents it is another example where bricks and clicks each have their value and companies such as Right Move have leverage technology and data to make the property selection process faster and more informed which means agents need to be deal makers and not window dressing.