The property business is not without its drama, and it seems as if the UK has reached its peak of online agencies. This niche sector, once considered the scourge of the high street agent, is now reportedly in retreat.
For example, in one day Purplebricks lost two crucial chief executives, along with a decrease of 24 per cent in its share price, with revenue predictions adjusted sharply downwards.
The market share of the ten top online agencies has failed so far this year to break the threshold of 5 per cent, which is surprising since in recent times, it was forecast that these agencies would reach between 10 and 20 per cent at least.
One of the original online agencies in the UK, House Network has also announced redundancies. Crowdcube, the crowdfunding website, has only seen modest progress for a new platform searching for investment, named Love2Move. Its aim is to provide traditional agents with online agency facilities.
All this negative news comes amid the collapse of online agents Tepilo and Emoov, which has rocked the sector in recent weeks. In addition to this, financial updates for some agencies have made depressing reading.
Housesimple reportedly lodged paperwork with Companies House which stated pre-tax losses amounting to £13.6m in the 12 months leading up to March 2018. Yopa has also reported losses of around £18m in 2017, which is its most recent reported trading period.
According to The Advisory, the property consultancy, Yopa and Housesimple’s extra listings for February 2019 have been very modest. Yopa acquired only 407 new listings, while Housesimple pulled in only 395.
While online operators such as Yopa and Housesimple have additional revenue from other fees and add-ons, they also have investors with large funds.
However, this trend of large-scale long-term debt and losses being accumulated by several online agencies is far outweighing the possible revenue within a market where their share cannot increase beyond five per cent.
It is predicted that online agencies will not disappear, but they will reduce in number. The revolution that the online agent promised is one which the majority of sellers and buyers did not want. This echoes past warnings from traditional agents, who have regarded these recent events as the newest examples of a repeating story in the sector.
However, there are some new factors. Firstly, people have become sceptical of online agents. This is reflected in the fact that there is no or little growth in the number of sellers opting to use online agents, despite the huge amounts spent on marketing.
Secondly, the discussion of innovating and disrupting the market by online agents is now not a new concept. With dramatic share price falls of up to 25 per cent and eight figure losses for online agencies, it is reported that 19 out of 20 clients still prefer the traditional agency. If marketing cannot increase the meagre 5 per cent market share, other avenues must be pursued.
To survive, online agents must deliver the impressive results they have promised over the years, with verifiable completion figures and growing share prices to sway the sceptical public. If they fail to do so, they should prepare to lose even more of their market share, and risk exiting the market altogether.
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