"There is already significant debate around agency fees. In some cases, they’re as low as 1% as the high street sector has looked to remain competitive against the low-cost, DIY model of online agents"
After a period of extraordinary boom, the UK housing market is cooling and in recent months, house prices have declined by 2% nationally (Aug 22 to Feb 23). Nested analysed the difference in earning potential per transaction between current cooler market conditions and the house price peaks of last year to see how it is impacting the earning potential of the nation’s estate agents.
In 2022, UK house prices peaked in November at £293,369. With an average estate agent fee of 1.4%, this meant that agents secured commission to the tune of £4,166 per transaction.
With the average agent selling 5.3 homes per month, this equated to a monthly commission of £22,079.
Now, however, the average UK house price has fallen to £287,506, which means earning potential on 5.3 transactions has also fallen to £21,638. For the average agent, this equates to a monthly pay cut of -£441 per month.
Nested’s analysis of 13 major cities shows that the worst-hit agents are those in Edinburgh. In the Scottish capital, the typical fee is just 1%, but agents transact an average of 10.9 homes each month.
This meant that when local prices peaked in August 2022 (£333,281), agent earnings reached £36,328 per month.
Today, prices have fallen to £319,723 which means agent earnings have fallen to £34,850 per transaction, marking a monthly pay cut of -£1,478.
In nearby Glasgow, where fees average 1.1% and transactions average 6.1 per month, agents are dealing with a monthly pay cut of -£712. This is despite local house prices being relatively low, hitting just £177,331 during their peak (Aug 22).
Meanwhile, in Sheffield, prices peaked at £223,882 in December 2022 and have now fallen to £217,187. With an average fee of 1.2% and an average of 6.5 transactions per month, agents have seen their pay reduced by -£522.
Alice Bullard, Managing Director at Nested, commented:
“There is already significant debate around agency fees. In some cases, they’re as low as 1% as the high street sector has looked to remain competitive against the low-cost, DIY model of online agents.
"However, for those who are working in the traditional sector, a hefty proportion of this commission goes to their employer.
"So now that house prices have started to cool, we’re seeing agents take home an even smaller amount of pay that is totally disproportionate to the hard work they’re putting in.
"However, agents can start recouping some of these losses by choosing to move across to the self-employed model of agency in which, even if the market is cool and prices are low, they do at least benefit from keeping 100% of their sales commission.”
