Buckle Up For Another Challenging Year

Reflecting on the rollercoaster ride that was 2023, I view 2024 with a cautious blend of optimism and realism. The past year has been nothing short of unprecedented, with the housing market throwing more curveballs than anyone could have predicted. Here is my annual look back over the past year and my predictions for the next.

+ It can’t get any worse … can it?

2023 wasn’t the best of years, it’s fair to say. Transactions dropped by over 20% – though thankfully by not as much as I’d predicted – with Help to Buy coming to an end in March and global conflicts continuing to rock the economic landscape, complicating an already strained market.

The Bank of England hit everyone with an astonishing 14 consecutive interest rate hikes, stabilising at a nerve-wracking 5.25% by year-end. This escalation hit households hard, especially those unaccustomed to the financial squeeze of high interest rates.

So, what does 2024 hold? Cautious optimism, I would say. While external forces have reshaped our market, our industry excels at adapting and becoming more resilient.

Mortgage rates are already starting to come down as lenders aim to be more competitive, restoring confidence to the market, and I anticipate we’ll see an uplift in transactions by 15% aided by a continuing fall in property prices, possibly by up to 5% in some places. While we may not return to the boom times soon, a gradual, steady recovery is on the horizon.

+ Elections and the housing market

In my 35 years at the helm of Spicerhaart, I’ve witnessed the profound impact government policies have on housing. As a general election looms, I firmly believe that addressing housing concerns holds the key to Downing Street.

The Autumn Statement left much to be desired in terms of catalysing the housing market. Meanwhile, Sir Keir Starmer’s strategic shift towards the centre, even acknowledging Margaret Thatcher’s ‘sense of purpose’ and ‘entrepreneurialism’, seeks to win over those disenchanted with the current government.

However, the chronic property shortage, exacerbated by landlords exiting the rental market and compounded by illegal immigration, led to a staggering 12% rise in rents in 2023 alone. Renting has become a financial abyss for many and so people will want to get on the ladder, whatever it takes.

My prediction? The rise of 40-year mortgages in exchange for lower deposits could revolutionise homeownership accessibility. The housing market’s future hinges on addressing these issues and adapting to the changing landscape.

+ Purplebricks and Strike will flounder

This time last year, I said that Purplebricks would run out of money – and they would have done if they’d not sold for a pound to Strike. From our own research, we can see that the businesses together are 20,000 listings down compared to last year, and I can see them heading for another fall, especially now that Purplebricks has switched to the free model.

When I used to go into my own branches, people would moan about Purplebricks but now that’s stopped completely as their market share has dropped so dramatically. I can see them draining their investors’ money, like other online agencies before them, before they eventually call it quits.

+ CoStar will knock Rightmove off its pedestal

Following CoStar’s £99m acquisition of OnTheMarket, CoStar’s chief executive and founder Andy Florance fired a broadside at Rightmove for growing ‘complacent, focusing on margin over innovation, and pricing ahead of value’. This year we can therefore expect to see an end to the Rightmove monopoly as CoStar gives the property portals a good shake up.

We’re likely to see shifts in pricing, offerings, and strategies within the industry, and I can see Rightmove struggling to maintain its position as the most dominant online property portal.

I’d like to see Rightmove concentrate on agents getting better products and services, and consulting them, so that agents don’t feel like they’re being ripped off.

As for moving into the mortgage market, that tells us agents exactly how they feel about us – the new management have overstepped the mark and you might want to think twice on upgrading your product package. What next? Will they be selling homes directly for the public?

+ More town centre branches will close

Expect more town centre estate agency branches to shut their doors in the face of the ongoing digital revolution, fuelled by AI. This shift will see agencies either relocating their teams to regional hubs or expanding remote work options for their staff. This trend resembles the one witnessed in the banking sector, where physical branches have dwindled nationwide.

Acknowledging the significance of a local presence, the strategy of hiring individuals deeply rooted in their communities will gain even more importance. At Spicerhaart, we’re committed to enhancing this approach through our Partnership way of working.

+ Better training required

Attracting high quality talent into the industry will remain a challenge in 2024. It’s crucial that we elevate the standards and ensure that those entering the profession are not only well-trained but also genuinely passionate about estate agency.

I’ve long called for a structured licensing programme as the key to attracting and nurturing talent that’s not just competent, but also dedicated and ethical. Should there be a trade body set up to train people for the whole industry and we all subscribe as part of a licensing scheme? We need people who are not only excellent at sales but are also focused on providing the best customer service.

+ Ones to watch

Under the helm of new MD Guy Gittins, Foxtons has retaken the London crown, after a period out in the wilderness. It will be interesting to see if he can sustain the meteoric growth which has seen share prices rise considerably since his return to the business, where he was once a sales manager.

His focus on local expertise, digital transformation, innovation and a customer-centric approach is a lesson for all agencies. They’ve gone back to their roots and are focusing on hard work, aggressive sales tactics and delivering what the public want – which includes opening until 7pm, three days a week, backed up by a call centre service.

It’s also worth keeping an eye on IAD, a European agency which entered the UK market in June 2023, having signed up 21 self-employed agents. Is their ambition to become the ‘dominant estate agency across Britain’ an overstated boast, given that the market here in the UK is very different to the one in France or Germany, where there’s far less home ownership? Or is it a very real threat?

Whenever we look at the self-employed market, we can see that the listings per head are very low, and many people – like in the States – have to take a second job to supplement their income, so I can’t see this model storming the market any time soon.

While 2023 was a year many of us would rather forget, it’s set the stage for a 2024 full of potential and growth. Here’s to a year of recovery, resilience, and renewed hope in the housing market.

Paul Smith is executive chairman of Spicerhaart