Despite the prospect of saving a substantial sum of money, home sellers are still not too enthusiastic about online estate agents, a report reveals.
In the latest quarterly edition of the TwentyCi Property & Homemover Report, researchers say that the market share for online agents has hovered around 7% and in the first three months of this year, their market share was 7.6%.
While there is a slower moving market in the first quarter of 2019, exchanges for both high street and online agents are up year-on-year by 7.4%.
But, while online agents are enjoying a slight increase in their market share, their transactions tend to be for lower value properties.
The data reflects that the average listing value is around 7.8% lower than their counterparts on the high street.
But why that should be the case when owners of more expensive homes will potentially save much larger sums of cash will be explored later.
Growth recorded by online estate agents
Indeed, the largest growth recorded by online estate agents was for those operating in Scotland, the North East and the North West.
While online agents are slowly growing in popularity in some parts of the UK, the trend appears to illustrate that the appeal for using online agents tends to be with those who are selling lower-priced properties and more of these are found in the areas where online agents are popular.
The report writers state: “Gaining traction in southern regions, including London, continues to be a challenge for online agents.
“Given the larger percentage saving to be made on fees when selling a higher value property, it is perhaps surprising that those selling more expensive homes are staying loyal to the high street model.”
The figures for inner London show that the market share for online estate agents fell by 21% between the first quarter of this year and last year to 5.2%.
In outer London, market share fell by 13.8% to 5.62%.
Online estate agents across the UK
The situation for online estate agents shows a mixed bag of results when their popularity is broken down by region – and it appears that Northern home sellers are definitely more keen, as the market share figures show for the first quarter of this year when compared with last year’s first quarter:
- Inner London: down 21% to 5.2%
- Outer London: down 13.8% to 5.6%
- South West: down 2.3% to 4.8%
- South East: down 9.4% to 5.18%
- East of England: down 14.3% to 4.36%
- Scotland: up 52.75% to 7.5%
- North East: up 6.4% to 5.7%
- North West: up 5.5% to 9.1%
- Yorkshire and the Humber: up 4.3% to 10.5%
- East Midlands: up 2.2% to 9.7%
- Wales: up 1.7% to 9%
- West Midlands: up 0.52% to 10.3%.
A lot to recommend online estate agents
For Paul James of Property Road, there’s a lot to recommend online estate agents and the current market conditions can help explain why take-up for online estate agencies has been slow.
He explains: “Online estate agents haven’t had the traction many expected but current market conditions continue to make it difficult.
“When the market is slow, people will turn to the tried and tested methods such as using traditional high street agents rather than risk the new and unknown.
“The lack of take-up from more expensive properties for online agents is interesting though as they are the people who stand to save the most from using a fixed upfront fee rather than a commission-based pricing model.
“However, I suspect that a lot of that is down to people with higher value houses typically being less price sensitive when it comes to estate agent fees.”
Follow the traditional high street estate agent route
This view that home sellers with pricier properties tend to follow the traditional high street estate agent route is underlined by research published in the report.
According to the Property and Home Mover Report for the first quarter of this year, online estate agents saw their growth mainly coming from properties valued at less than £200,000.
The research shows that between the first three months of 2019 and last year, the difference in market share grew by 12.47% to 9.04%.
However, the other price bands looked at by researchers offer scant consolation with online estate agents seeing their market share for properties valued between £200,000 and £350,000 falling by 2.46% to 7.13%.
Properties valued between £350,000 and £1 million saw online agents recording a fall in market share of 12.54% to 4.63%.
The figures for properties worth more than £1 million saw a dispiriting fall of 24.31% in market share to reach 0.85%.
‘Less market share of more expensive properties’
The report writers’ state: “The figures show there is less market share of more expensive properties, of which there are generally more in the south.”
For those who may be wary about using online estate agencies, then their time may yet come as the economy picks up and more homeowners decide that their low-priced packages offer better value than a commissioned-based service.
As Mr James at Property Road explains: “I would expect that as market conditions improve, we are likely to see significant growth in the use of online agents.”
The real question, however, will be whether the owners of pricier homes – particularly those in London and the South East – decide that an online estate agent offers the best prospects in finding a buyer than a traditional high street agent, is one that remains to be answered.