Estate agents feeling heat as housing market cools
ESTATE agents could be next on the high-street casualty list, with more set to experience financial difficulty as the housing market cools and online firms move on to their turf.
Experts at accountancy giant KPMG reckon that pressures on high-street agents will come to a head in the second half of the year, piling further pain on town centres reeling from hundreds of retail store closures.
Blair Nimmo, KPMG’s head of restructuring in the UK, said: “Highstreet estate agents are presently facing an unprecedented set of challenges.
“The rise of online-only agencies have combined with falling house prices, a general slowdown in sale activity and a raft of legislative changes, all of which have generated headwinds for your average highstreet agent.
“I would therefore not be surprised to see operators across this sector struggle over the second half of the year and beyond.”
Profits at the likes of Foxtons have come under intense pressure recently, with the London property market slowing considerably since the Brext vote.
Britain’s biggest listed estate agency, Countrywide, which is behind Hamptons and Bairstow Eves, is also in full-blown crisis as it seeks to raise emergency funding.
It comes as the rise of online firms such as Purplebricks, Emoov and Tepilo has eaten into the market share of bricks and mortar firms.
The high street has been pummelled this year by several high-profile retail administrations and store closure programmes.
House of Fraser, Maplin and Toys R Us have all gone bust, while New Look, Carpetright and Mothercare have all shut stores.
The casual dining space has also come under pressure, with Jamie’s Italian and Byron among the firms to close restaurants.
“We continue to see companies in the casual dining and retail spaces battle hard in the face of changing consumer attitudes towards spending, coupled with increased costs as a result of the living wage and business rates pressures,” Mr Nimmo said.
“Whilst a number of chains have survived through the implementation of successful CVAs or via prepack administrations, inevitably there have been site closures and job losses across many parts of the country.”
But a study by KPMG of notices in the London Gazette shows the total number of companies in England and Wales entering into administration during the second quarter of 2018 fell sharply.
A total of 302 companies went into administration between April and June 2018, compared with 347 in the previous quarter, a fall of 13%.
Year-on-year, the number was up from 297 administrations seen during the same period in 2017.
Mr Nimmo added: “The latest figures reflect a relatively positive picture for most businesses.
“For the most part, adopting a long-term cautious approach appears to be paying off for the majority of firms, although sectoralspecific challenges and broader global economic changes will inevitably force some businesses to reconsider their operations and potentially restructure their organisations to improve efficiencies.”