Property professionals finally embracing tech?
If you have been tracking key metrics this year, your graphs will look like a rollercoaster. For estate and letting agency owners, average house price trends will be overlaid with fee income, wage growth and inflation.
Going up
Average house prices are still rising. Yes, they are trending upwards at modest increments (the Nationwide’s House Price Index revealed the UK’s average house price increased by 0.2% in June, following a 0.4% rise in May) but the cumulative effect is a 1.5% increase in year-on-year property values.
Achieved sold prices have a direct impact on agency fees and there is a new piece of research to substantiate that higher property values are boosting the income of agents. Data analysis by Open Property Group found UK estate agency fees have increased by 21% since the 2019 General Election.
In terms of the change in income generated, some number crunching illustrates the impact. Open Property Group’s data shows that in 2019, when the average house price was £230,612 and the average estate agency fee was 1.53%, agents earned an estimated £3,528 per sale.
Fast forward to the summer of 2024 and agents have seen their income rise. Despite the average agency fee dipping to 1.42%, the average house price has increased to £280,311 and each sale is resulting in a new estimated fee of £3,980.
Offsetting impacts revenue
Not all agents, however, are cheering. Two other sets of statistics that are on the up mean revenue generated quickly evaporates. The latest Office for National Statistics data shows the annual growth for regular earnings – with and without bonuses – rose between February and April 2024 (5.9% and 6%, respectively). In fact, wage growth has outpaced inflation since June 2023.
While many professionals seek a salary review in line with inflation – especially during the cost of living crisis – others will ask for a pay rise to bring them in line with similar professionals in other industries. This could be true of sales and lettings agents following analysis by eXp UK, which was published on leading trade website, Property Industry Eye.
eXp UK claims agents are not being paid fairly for their work, based on current earnings data from Salary Expert for 15 professions that share a synergy (sales based roles with commission potential). When the base salary and commission was factored in, agents only placed 11th out of 15 different sales professions.
Fixed costs spiral
Recruitment and talent retention has long been an issue in agency, with business owners having to pay higher wages to remunerate the best staff and keep them loyal but wages are not the only fixed cost that’s rising. Evidence suggests agency owners are paying more for utilities, insurances and portals (in May, Rightmove said its fees were likely to increase again later in 2024).
It is, however, wages that are behind a shift towards a greater adoption of proptech, especially in the lettings sector. PayProp UK’s Rental Confidence Index 2024 revealed letting agents are increasingly using proptech to manage business growth, rather than take on extra staff who attract higher wage bills.
When drilling down into the details, 85.5% of the property professionals surveyed agreed proptech was a worthwhile investment. When asked what they look for when investing in tech and its impact on their business, 70.2% felt it was cheaper and 68.5% said automation was more productive.
Inflation is down but not out
And now to the figures in decline. Inflation has been stealing the headlines for many months and in June, the klaxons sounded as UK inflation dropped to the Bank of England’s (BoE) 2% target for the first time in three years.
This is great news for the wider economy but the fact remains – the price of goods and services is still increasing. The BoE puts it this way: “While prices overall are very likely to go up more slowly than they have done in recent years, lower inflation doesn’t mean prices will fall. Most things will still cost more than they did before.” The BoE forecasts inflation going back up to around 2.5% towards the end of 2024.
Ways to reduce fixed overheads
If you are a property business looking to reduce fixed overheads, proptech can certainly help streamline workforces and reduce wages bills. Another solution is opting for variable costs that can be better managed in line with budgets.
Viewber is part of a flexible property support network that offers sales, lettings, social housing , managers and auction companies a ‘pay as you go’ service. We blend proptech and people to deliver a value-for-money property visit/viewings service.
There is no minimum order requirement or contract, so you only pay for a Viewber when you really need them, as opposed to a full-time staff wage. Our network flexes with market conditions, adapting to seasonal lulls and peaks, and we operate with a low fixed ‘per job’ fee, so you’re always in control of your spend.
We’d love to talk numbers and explain how you can swap fixed costs for variable ones that are more budget friendly. Get in touch – our team is waiting.
