'Since 1988 the number of house sales has fallen by half yet the number of estate agency offices has only shrunk by around 15 per cent,' said Harry Hill, joint managing director of Hambro Countrywide, the UK's third biggest chain. 'There simply isn't enough volume to support the business.'
So far this year house sales are down more than a fifth on the same period in 1991 - itself the lowest for transactions in more than a decade.
Last year the top 10 chains, which together account for around a third of the UK's estimated 12,500 estate agency branches, made combined losses of around pounds 118m. Despite having cut back, almost all expect further losses this year.
Barrie Holder, general manager at General Accident, the insurance company that owns the fourth-largest chain, said many people had been waiting for things to get better but that, with no sign of any pick-up, the industry would have to continue to contract. 'We've all held off doing anything to take down the business. But volumes have fallen more than offices. Someone has to crack or we all have to shrink.'
Hambro has cut the number of its offices by around 40 to about 480 since the peak. Mr Hill estimates another 10 per cent of the chain might need to go if the market continues at the current level, though he believes that is proportionately less than the contraction that would have to take place in the industry as a whole.
A rationalisation is already under way at General Accident, which has shed about 30 branches in the past few months and is widely expected to continue to shrink from its present 410 branches to around 370.
GA and Royal Life, part of the Royal Insurance group and the biggest chain, are seen as being under the greatest pressure to stem losses as insurance companies are also suffering losses in their non-estate agency businesses. So far this year Royal has shed around 30 offices.
Three of the top 10 chains are owned by building societies - Halifax, Nationwide and Woolwich. With no shareholders and secure core businesses. they are viewed as better placed to sit out the slump.Reuse content