PurpleBricks, the online real estate site offering fixed-price homes selling for around £849, has seen its share price more than quadruple from 95p to 422p now. At the same time, shares in traditional estate agency Countrywide were changing hands at 400p. Now, they are 113p after yet another warning about slowing profits.
Countrywide could, just about, cope if its problems were purely cyclical. Transaction activity, more important to estate agents than rising house prices, has fallen significantly in the crucial London market. The volume of sales is down, and the time it takes to close a sale is rising.
Meanwhile, the long boom in letting agency income is over. Rents are flat or falling and buy-to-let activity in 2018 is expected to be one-third the levels of 2015, squeezed by rising taxes and tougher mortgage lending criteria.
But these cyclical factors will, one day, turn around. The problem for Countrywide, and other high street chains, is the existential threats to their business. Two we know about for sure. Early next year the tenant fees ban comes into force, which will slice into lucrative lettings income. Second, Rightmove, the online property website, will continue relentlessly driving up fees that estate agents know they have no choice but to pay.
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Join us in Bangkok from the 28th of February to the 1st of March for the 22nd Property Portal Watch Conference. The theme for this year is The Future of Online Real Estate Marketing – Getting Closer to the Transaction.