Online agents and their ability to take market share has been a hot topic for many years. This has been on the lips of my customers since properties listed by House Network started appearing within my region, the North West. At that particular time I was working for one of the major property portals and the frustration for agents was centred around fair charging structures, are they actually estate agents, do they provide a full service etc. but this has shifted as the business model has matured and online agents are now an accepted part of the competitive landscape.
I have heard many different takes from regional agents over the years on what they think the online agents impact will be on their business, everything from doom and gloom ‘they could put us out of business’, non-plussed ‘they’ll be a passing fad’ and those who are more pragmatic ‘we’ll keep pushing our service and value offering and adapt if we need to’.
As we’ve reached the half year point of 2019 I thought it would be worth sharing what the current state of play is for online agent market share, nationally and regionally, but also look at how property prices seem to have an impact on the desirability of utilising a fixed fee online agent.
The current national picture?
As you can see the national market share of online agents currently sits at just over 7% and the average new instruction price this year, January to June inclusive, is £346,000 but the regional picture shows a significant variance to the above.
Let’s take a look at England first;
Estate agents based in Yorkshire and The Humber are feeling the effects of online agents eating into their market share the greatest with a significant 11% of instructions being won and at the opposite end of the spectrum is the East of England where around 4.5% are going to online agents.
What I do find interesting, looking at the top 4 regions where online agent market share is the greatest, is the similarity of average new instruction price, between £211,000 and £260,000 - January to June ’19. Is this the sweet spot where the fixed fee, pay up front model has the greatest attractiveness?
Looking at the North East where average listing prices are significantly less, £168,000 this year, and there is a drop off in online agent market share, 6%. Inner London where average instruction value is at its highest, £875,000 sees the second lowest penetration of online agents with less than 5% market share.
Of course there will be many other factors which will have an impact on the desirability of the fixed fee model (confidence in the property being sold, how well the local agent or LPE presents their vision of selling the property at market appraisal, reputation etc) but the correlation between price and online agent market share does seem obvious.
Our other countries, what does Scotland and Wales look like?
I don’t want to this blog to be just about England so let’s understand what’s going on elsewhere;
Online agent market share in Wales and Scotland are both faring above the national average, Wales being particularly high at close on 10%.
With Scotland and Wales being large landmasses, and with significant variations in marketplaces (Glasgow and the Highlands being very distinct marketplaces) maybe a deeper dive on these countries could be a good exercise for a future entry? Let me know what you think?
Online Agent Market Share, consistent or volatile?
When we look at Q2 ’19 v Q2’18 the national picture indicates there has been a slight drop off in market share for online agents of a little over 2%. Again though, the regional variations are significantly different.
In terms of % growth, the North East has witnessed the greatest difference with a little over 12% (although this region still sits at lower than national average). At the opposite end of the scale, not just in average new instruction prices but % change of online agent market share is Inner London, a 23% drop. Interestingly the trend for Outer London with the 2nd highest new instruction value also seeing the second highest drop in online agent market share, just under 18% change.
As is frequently reported, the London market has been suffering and levels of confidence not what they were. Are these lower confidence levels having an impact on this business model’s ability to encourage sellers to part with their cash either up front or regardless of success?
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