Are the markets predicting a bright future for online agents?

It is remarkable how little press coverage has been given to the dramatic price declines in listed UK estate agents since the summer. The larger companies such as Savills (down 57% since May) have US and commercial property exposure and are thus less illustrative of purely UK conditions. But what are we to make of a largely UK residential operator like Humberts declining almost 70% since 1st May? The majority of market commentators are predicting merely flat property prices for 2008, and not the kind of early 1990s-style house price recession that might be surmised from a decline of this magnitude.

The Government’s ham-fisted introduction of HIPs and a series of interest rate prices have certainly taken a toll on completion levels, but is it possible that the market is now finally waking up to the threat of genuine competition from online agents? The high cost ‘bricks and mortar’ estate agency model has remained unchanged for hundreds of years. But now it looks as vulnerable to online competition as traditional travel agency and conveyancing proved to be as online agents raise their game with sophisticated tools and expert call centres.

One thing is certain: the sale of Foxtons by owner Jon Hunt (to BC Partners in May for a reported £390 million), together with the sale of Countrywide plc (to Apollo Management LP in April), look like very strong candidates for trades of the year (for the sellers, that is).