Shuffling blindfolded towards the edge
Tuesday, September 14, 2010 by Ed Mead
I reckon the Estate Agency world might just be staring over the edge of a precipice. It’s got nothing to do with competition from the internet or private sellers, or anywhere else for that matter, but has everything to do with the long term trend downwards in sales volumes.
Without wishing to be selfish it would easy to argue that my firm would suffer less than most as is evidenced whenever volumes fall and our market share goes up, but looking at the larger picture, and using anecdotal evidence from what’s going on around me at the moment there’s no doubt at all that many agents are fighting for their lives.
The recent one year mini recovery bears little resemblance to anything real and those agents who slashed and burned staff in 08/09 might have given the impression that they’ve made good profits but should be careful before feeling too clever. But whilst many agents didn’t close offices and dropped staff, they’re now looking with dread at the unprepossessing possibility that the sales market isn’t going to recover volumes anytime soon. For many that’ll mean curtains and the sad thing is it IS avoidable.
Quite why the industry is obsessed with property prices is beyond me when the important one is volumes. Stamp Duty and, in London anyway, more foreign buyers mean people simply aren’t moving as often as they used to. This issue could be addressed in one fell swoop by reducing Stamp Duty to 1%. It’s plenty and ever since the increases started in the late 90s volumes have been sliding. In 2000 there were c 15000 transactions in Greater London every month. Imagine the business generated for solicitors, surveyors, interior designers, builders, decorators, carpet and curtain makers, white goods makers etc etc etc. A lot of VAT receipts gone begging there chasing the Stamp Duty on the existing c. 6000 or so. That’s 60% down on what it was.
In London there’s a little to be optimistic about with forecasts for the FTSE good up till Christmas and those pesky bankers looking like they might have something to spend. Allied to that is the distinct possibility that Sterling will fall post the Autumn spending review and bring back the Euro buyers who have picked up some of the slack.
But as I sit here now there’s little to feel very positive about, and if the market was going to move I’m pretty sure we’d have seen signs of it by now. So…if you’re a buyer, try it on a bit, and if you’re a seller probably best listen to what the buyers are telling you.
If you’re the Coalition Government, please have the balls to do something vaguely counter intuitive and lower Stamp Duty for the long term benefit of all, including the Country.