Market Update

As we approach Christmas and the New Year it seems an appropriate time to look back at 2018 and forward to 2019. In doing so I have also reflected on things by re-reading a number of excellent texts, some of which I quote from in this article.

I think it is fair to say that 2018 has been a challenging year for the estate agency industry with the spectre of Brexit looming ever larger as the year progressed and a number of major legislative changes putting pressure on various parts of the industry.

In 2018 we saw the introduction of GDPR and a tightening up of how personal data is collected, stored and used and 2019 will see the tenant fee ban and the 5th Money Laundering Directive come into force. 2018 has also seen Conveyancers move to publishing fees on their websites and the Government is rightly pushing an increasingly transparent and consumer focused agenda but one that needs agents to be more aware and operate both compliantly and commercially.

There are ever increasing challenges as new business models emerge and competition increases, and this has seen many agents continue to pull one particular lever - reducing fees - which, in turn leads to a need to grow volumes and, in reality, sees falling incomes and reducing profits.

There are a plethora of new #proptech offerings available , many of which have found solutions for problems that simply didn’t exist although some provide great opportunities to change business models but many agents are simply too conservative (small c) to look at making radical enough changes in order to meet the future head on.

Charles Handy’s excellent book – The age of unreason – highlights the story of a frog in a pot of cold water who allows itself to be boiled alive as the water is heated up slowly, too comfortable with continuity that it fails to recognise that continuous change at some point becomes discontinuous and demands a change in behaviour!

The heat is being turned up on the property industry but there remain many frogs failing to recognise or action change.

A recent report indicated that the only businesses closing faster on our High Streets than estate agency offices are public houses. For those of you who regularly read my articles, you will know I have been predicting “blood on the carpet” for some time – it is happening all around us and the pace is increasing.

In amongst the sea of sameness in which so many in the industry swim, there are some fantastic examples of those who have risen above the waves and who have chosen to swim against the tide of mediocrity. These agents have spent time analysing their businesses, rethinking their operations and in some cases tweaking, in other cases radically reshaping, their business offerings and modus operandi.

Change is always difficult and requires great communication and effort from management.

It was Machiavelli in his iconic work - The Prince – who said that: “There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success than the introduction of a new order of things, because the innovator has for enemies all those who have done well under the old conditions and lukewarm defenders in those who may do well under the new.”

Not a bad view on managing change coming from a man who lived between 1469 and 1527!

Of course if one wants to go even further back in time to find tactical direction for the future – Sun Tzu’s – The Art of War – is a must read.

Looking forward to 2019 we have the huge uncertainty surrounding Brexit to contend with, recent weeks have shown that our politicians and public are unable to get a consensus on the best way forward and we are seemingly heading for either an exit from the EU without any form of  a deal in place, the outside possibility of a “people’s vote” i.e. a second referendum or some last minute concession that suddenly changes everything. The Tory party are in disarray on the subject, Teresa May is a “dead woman” walking politically and the opposition under the chuckle brothers – Corbyn and McDonnell - are weak and clueless and quaking in their boots at the thought that they might somehow have to put their rhetoric to the test and perform!

Uncertainty is bad for markets and every indicator shows confidence heading South. This will mean the challenging conditions faced in the property industry will continue as consumers “sit on their hands” and transactional volumes stagnate.

In all conditions, despite the threats, there are opportunities too but it will be those with vision and the cajones to take them that stand the best chance of success. For others, battening down the hatches might be a way forward. For everyone, just “going with the flow” is unlikely to be a recipe for either survival or success.

All in all, challenging times from which the best will emerge stronger and better equipped. Innovation will intensify and new thinking come to the fore.

I look forward to helping my clients in 2019 be the best they can be and capture a larger slice of the pie!

Managing Director