"Agencies will have to radically change their approach to managing their networks if they are to weather the storm"
And yet our call tracking technology suggests that branch calls go unanswered 24 per cent of the time. You might not think this is such a big problem. But 50 per cent of those calls are people asking for a property appraisal. You could increase sales 10 per cent if the phone got answered.
Now there are reasons to feel bad for estate agents out in the branches.
While the latest Halifax house price index suggests prices rose for the fifth consecutive month in November - leading to the strongest quarterly house price inflation since 2006, just before the financial crisis - estate agency is a volume game. We are in December which is usually the quietest month for buyer activity.
Nationwide has said it expects house buying demand to cool in the months ahead as borrowing costs rise. Zoopla has predicted that the housing market will slow in 2022 with transactions expected to decline 3 per cent, year-on-year.
The market faces higher living costs (driven in part by rising energy costs) which will affect buying power. The Sex Turtle of Threadneedle Street will have to vote to put the base rate up again soon and that will push bills for households on variable rate mortgages up further. Variable rate mortgages make up a fifth of the total stock. That will impact buying power even more. When that might happen is open for debate. Given how long it took the Bank of England monetary policy committee to put rates up on the 16th of December, it looks likely that the decision might get kicked into the long grass given the lockdown by stealth. But it will happen in the new year. Credit can’t remain this inexpensive.
This is important as cheap credit is driving the current boom. You can explain away high prices by citing constrained supply, not enough social housing, nimbyism, profiteering housebuilders, too much immigration, planning controls, absentee foreign buyers. But we all know that the boom is the result of easy money. Ultra-low interest rates that have been the driving force behind ever higher prices. As one commentator put it, “extreme monetary easing in response to the pandemic has pushed [house prices] into the stratosphere.”
Even the big banks, which seem to have done remarkably well out of the pandemic, are worried. In its most recent results, Santander UK suggested the boom time could well be drawing to an end.
The bank said rising interest rates could squeeze households and lead to a “rapid undermining” of demand in the housing market. It chimes with a warning from the OBR that forecast mortgage interest payments would rise by 13 pc year on year by 2023, a jump not recorded since before the housing crash in 2008.
There are, potentially, some dark clouds ahead.
And I don’t think a lot of estate agencies are ready to operate in that sort of environment again. With the number of transactions set to be so spectacularly high this year, it hasn’t really mattered if branch networks have only bothered to pick up the phone for three in every four valuation instructions you put through to them. This has been a fat year. People have grown indolent. Lazy.
On the other hand, with the industry facing such significant headwinds, agencies will have to radically change their approach to managing their networks if they are to weather the storm. In 2022, they will need to start grabbing the business that is out there with both hands.
