"Man is the only creature that consumes without producing. He does not give milk, he does not lay eggs, he is too weak to pull the plough, he cannot run fast enough to catch rabbits. Yet he is lord of all the animals. He sets them to work, he gives back to them the bare minimum that will prevent them from starving, and the rest he keeps for himself." George Orwell, Animal Farm
In the wake of one of the most progressive budgets of recent times I want to take a look at how our industry contributes to the low level of productivity in the UK economy. As pointed out in the budget and its analysis, the UK economy has a productivity level below that of five of the G7 countries. We trail France by 28%, Germany by 29% and the US by 30% and this is a damning indictment and one that we simply can not afford to ignore.
With 1.76% of the working population (ONS figures 2015) employed in the Real Estate sector we have a duty to turn the spotlight on ourselves and find ways of becoming far more productive. The latest Office of National Statistics figures show that 547,000 people are employed in our industry and yet in 2014 we only sold 1.22m homes. That's a fraction over two homes sold per person. We might as well just be walking up and down the streets hawking our wares. When you consider that Rightmove and Zoopla have changed the way home buyers are searching for homes it is incredible to think that there are now nearly twice as many estate agents as there were at the turn of the century, when the number of properties sold was only 5% less than in 2014.
There are of course lots of excuses as to why we need more agents to sell the same number of homes but none of these stack up. The real reason is because the market is horribly inefficient and protected by long running vested interests. House prices have been on the rise since 2000, with just a brief pause for the worst global depression since the Second World War. House prices are rising but fees are remaining stubbornly high at around the 2% mark, allowing more staff to be employed to do the same job. We are stuffing an already saturated market, but why?
Around the same number of properties are being sold each year, and yet our industry has swelled like a chubby Augustus Gloop; we have double the number of estate agents selling our homes as we did in 2000. It raises red flags when thinking about the productivity of estate agents in the UK. Why are so few houses being sold when there are so many more people employed to sell them?
With such a huge number of estate agents in the UK, it weighs down the overall productivity of the nation considerably and highlights the need for drastic change. Clearly something isn't working and estate agency needs to streamline and modernise its services in order to bring about more respectable results.
High street estate agents claim that there's no room for 'disruptive' online estate agents, but with the incredibly low levels of productivity in the traditional field, it's clear that there is ample room for improvement and that is putting it mildly.
Half of the job is attracting buyers and this is now done through portals like Rightmove and Zoopla so how can this industry not be ripe for disruption? Change is needed and change is coming with the arrival of online estate agents that are leveraging the power of Rightmove (1.1bn visits in May 2015) and Zoopla to deliver a service that has been outperforming that of the high street for the last twelve months. That's fact not fiction.
We speak to high street agents regularly and there is a real mixture of those that have their heads in the sand and those that downright fear what we are doing. Those that fear us, I urge you to adapt and improve and those with their head in the sand, it's probably about time you dusted off your CV as you may well need it soon.