But suddenly times may be changing. Mortgage rates are dropping, and they could fall a long way. If this lifts the housing market out of the doldrums, the effect on estate agents' profits will be dramatic. One back-of-an-envelope calculation suggests that every additional pounds lm of turnover adds pounds 400,000 to an agency's pre-tax profits.
Very little of this recovery potential is in share prices. Hambro Countrywide, the only quoted volume player, has seen its shares recover from under 20p to 31p, but that compares with a peak around 120p. Shares in Savills, with a heavy exposure to the even harder-hit agricultural and commercial sectors, has staged a similar bounce to 32p against a low of 21p and a peak of 130p.
London residential specialist John D Wood has managed barely any recovery at 19p against a low of 17p and a peak of 160p. It is capitalised at pounds 1.6m - less than some of the properties on its books.
Hambro Countrywide is the dominant player with 480 branches and around a 5 per cent share of transactions handled. Like most of its rivals, the group has been having a harrowing time. Since the boom years of 1988, the number of house sales has dropped from over 2.5 million to around 1 million and house prices, particularly in the South-east, where the group is heavily exposed, have dropped by perhaps a third. The management has cut costs but still made losses. In 1988, it made profits of nearly pounds 25m. Unlike the others, however, Hambro Countrywide is into more than estate agency, with valuable subsidiaries providing legal protection services and life assurance.
Nevertheless, estate agency will provide the real turnaround. The leverage is indicated by the fact that the group makes hefty losses on say 45,000 transactions a year, might break even on 47,000 transactions and would start to do very well with transactions exceeding 50,000. Some analysts believe the group's profits could reach pounds 25m again in two years. On a low tax charge, that would drop the P/E to between four and six and leave the shares looking very cheap.
Savills appears to have more to do to solve its problems. The company has been making heavy losses but, following top management changes and brutal cost-cutting, analyst Andy Yeo at Hoare Govett is looking for a pounds 500,000 profit this year rising to pounds 1m next. On the latter figure, earnings per share would be 2.8p for a P/E of 11.4.
Most bombed out of all is John D Wood with its price down at penny-share levels. Yet, like the other quoted estate agents, there is no danger of the business going bust, so eventual recovery looks virtually assured.
One forecaster is looking for the group to more or less break even this year, with profits of perhaps pounds 100,000 rising to pounds 400,000 next year, simply on rationalisation of its loss-making agricultural division.
On profits of pounds 400,000, the PE falls to six, while a 1p dividend would give a 7 per cent yield.
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