A brewing ‘web war’ over property advertising could mark the beginning of the end for high street estate agents, according to the head of the industry’s professional body.
The National Association of Estate Agents (NAEA), based in Warwick, is launching a free property listings website after members complained the credit crunch meant they could not afford the prices charged by some sites.
And its chief executive, Peter Bolton-King, said the drive to cut costs in the worst financial conditions for nearly 20 years could lead to more radical changes in the industry.
“As we move more into what I call the ‘clicks and bricks’, estate agents’ economy, people are going to start to wonder if there’s a requirement to have expensive high street offices,” he said.
“I’m not saying there is or there isn’t but there has been a thought.”
He said the NAEA’s new website Property Live – due to be launched at the start of October – had to be launched because the group’s 10,000 members were feeling the pinch of the credit crunch.
“This is a response to our members’ wishes to find a way to control some of their costs,” he said. “Given the current climate a lot of them are looking to do that.
“We have had a small property portal running as part of our website for some time, but it was never a separate unit and also there was a charge. We decided to start from scratch given the climate.”
Mr Bolton-King said the conditions for estate agents were the worst he had seen since the housing crash of 1990-91, and things were worse in some ways because the market had dipped so quickly this time around.
Yesterday it was announced that house prices had dropped 5.3 per cent in London as the credit crunch hit the previously unstoppable property market in the capital.
And research by estate agent Savills showed the value of residential land had plummeted by 20 per cent in the first half of the year, putting the property sector under further pressure.
The NAEA announcement caused share prices to crash at paid property advertising site Rightmove.
Rightmove, which charges a monthly subscription of £495 for estate agents to advertise on its site, currently boasts more than 90per cent of the UK’s estimated 20,000 estate agents as advertisers.
But the announcement of a new potential rival saw the firm’s shares fall as much as nine per cent amid investor concerns.
Daniel Lee, the chief executive of free property listings site Globrix, said the idea of paying a subscription for listings was dead as a business model and that offering free services was the only way ahead.
“The key thing here is I think agents are looking to find a way not to spend so much money, and this just really validates our business model,” he said.
“I don’t think payment for advertising is dead, I just think payment to be listed is dead. People want a more performance-related business model. You don’t pay Google by the month.”
He added he agreed more estate agents would be looking to close nonessential shops as people became more comfortable doing business on the internet.
He said: “Lots of agents realise that although they have an office most of the leads come from online.
“High street estate agents aren’t going to disappear, people tend to want to interact with the brands, but we are seeing some of them definitely slowing down on their offices.
“If you imagine Birmingham, you could have a couple of central offices, but do you really need one in Walsall or Wolverhampton?”