Research by estate agent, Nested, suggests that in the year to December 2022 the typical UK estate agency branch will have seen a drop in pipeline of 27% compared to this time last year. This means that in the following six months their banked revenue will likely be 27% lower accordingly.
By analysing residential sales data via HM Land Registry, Nested have established that property transactions are trending substantially down this year compared to 2021’s 1,131,268 sales. The extrapolated outcome for 2022 is likely to reach just 773,722 sales, a reduction of 31.6%.
House prices have until now risen year on year and the typical home is valued at £283,564 (average for 2022) versus £258,586 12 months ago. 2022 saw an increase in Britain’s estate agency branch numbers from 21,139 to 21,619.
Average agency fees are stated as 1.18% (excluding VAT) of the sale price by respected source The Advisory.
The consequence of these factors combined is that the average UK estate agency will see a revenue drop on an annualised basis of 26.7% as sales pipelines dwindle and deals become fewer and further between.
Alice Bullard, Managing Director of Nested, says: “Our research suggests a meaningful fall in revenue for agents but let’s not be too alarmed by this return to a more balanced market whereby a reduction in buyer numbers begins to meet seller numbers for the first time in a while. We’ve all become used to sky-high demand fuelled by low mortgage rates far outstripping supply yet this simply means that those of us that have seen cyclicality like this before will return to ‘old school’ agency methods in order to thrive.
"Some individual agents will be looking at their individual pipelines now though and wondering if they have less to lose by changing roles. The former comfort of a fat forward number of SSTCs may have been the reason to stay in their role until recently whereas with less to hold them back they may be tempted to see how much greener the grass is elsewhere in the industry and H1 is the perfect time to start building your pipeline”.
