When the recession hit in 2007, the housing industry was one of the biggest casualties and it struggled to recover. Between 2007 and 2008, one in four estate agency offices closed in the UK, affecting approximately 30,000 members of staff. Later, the strain took its toll on even the larger agencies with LSL Property Services announcing a pre tax loss of £7.9m for the first half of 2012.
Fortunately, in 2013 the UK economy started to recover. Deloitte believed that this was due to three important factors: continued low interest rates, a reduction in global economic risk, and a £12 billion injection into the UK consumer sector from mis-sold PPI. Throughout 2013, the economy continued to grow and saw a 3% year on year increase from 2012.
This growth has been reflected in the housing industry. In February 2014, figures from The Office of National Statistics showed that in London and the South East, property prices continued to race ahead with a 17.7 per cent increase year on year. However, even with these areas out of the equation, there has been a national rise in house prices by a substantial 5.8 per cent annually and an accompanying increase in confidence from both buyers and sellers.
Savills have predicted that UK house prices will continue to rise by this amount year on year, hitting a total national average of 25% increase by 2018. Yet, with the Financial Conduct Authority and The Council of Mortgage Lenders bringing in the Mortgage Market Review (MMR), buyers face ever tougher criteria in order to secure their mortgages.
Taking this into account, it is apparent that the housing market is becoming increasingly competitive and as a result each seller becomes more valuable to the estate agent. Property expert, Henry Pryor states bluntly: “The joy of a seller’s market is that you can be absolutely ruthless with agents.” With sellers taking control in the coming months, estate agents will need to become more attractive in order to secure sales and ensure the future success of their business.