As 2024 draws to a close, the property market finds itself facing unprecedented challenges. These hurdles, many of them created by government, could severely impact how we operate as estate agents, pushing businesses to their limits at a time of uncertainty. What’s clear is that the next few months will be extremely tough for us all.

Rising costs are piling pressure on already stretched resources. The increase in national minimum wage and national insurance contributions will cost the average estate agent an extra £1,300-£1,500 annually per staff member. To offset these costs, I can see agents raising their fees by up to 12.5%, a bitter pill in a market already resistant to fee increases.

Some agents may feel forced to make cuts. Part-time staff, whose proportional costs can be higher, might be the first casualties. Others may reconsider their entire staffing structure. A recent Confederation of British Industry (CBI) poll of business leaders found that 62% were planning to cut their hiring plans, half said they’d be forced to lay off staff and almost half were looking to delay pay rises.

On top of this, conveyancing continues at a snail’s pace, meaning that the time it takes to sell has stretched from the traditional 12 weeks to six months, or even more. Pipelines are now turning only two or three times a year, instead of four, and this could have catastrophic consequences for many.

It’s not just frustrating for agents, and their buyers and sellers, it’s also creating social challenges too. Tenants left in limbo, often with expiring tenancies, are at risk of homelessness because their purchase chains can’t complete in time.

This gridlock also has serious financial implications. The first quarter of 2025 will see a rush to complete transactions before April’s stamp duty threshold changes, which will leave first time buyers even more out of pocket. So someone currently paying no SDLT will now have to pay £6,250 when buying a home worth £425,000.

It reminds me of when Nigel Lawson altered MIRAS in 1988 so that unmarried couples could no longer pool their allowances to claim double tax relief. Then, as now, we saw a frantic rush to transact, followed by a steep drop in market activity. If history repeats itself, a post-April slump could leave agents grappling with a barren market.

Those first-time buyers are facing mounting pressures, too. Without the financial safety net of the “Bank of Mum and Dad,” many aspiring homeowners will simply be priced out, further widening the wealth gap.

The Labour government here has missed an opportunity to reinstate Help to Buy, unlike the Labour party in Australia whose Help to Buy bill has just passed through the Senate. Well done Oz, at least one country is showing us the way!

Perhaps the Labour government here should take note of the petition that’s gone viral, calling for a new election, which has now been signed by almost 3 million people. You can’t run a country by petition, it has to be done through the ballot box and democracy has to be adhered to. Even so, people are expressing their dissatisfaction, and this has to be acknowledged.

Additionally, the government’s ambitious housing targets of 300,000 extra new homes a year are a pipe dream without significant investment in the construction sector. Tradespeople, crucial to delivering these homes, have left the UK in droves. At the same time, we have a shortage of town planners and building materials, alongside infrastructure issues.  Meanwhile, social housing provision remains dismal, leaving vulnerable families without options.

Housing minister Matthew Pennycook has warned that it will be “more difficult than expected” to meet their housebuilding target because of the depth of the supply downturn, while the OBR has projected that Labour will miss its 1.5m housebuilding target over 5 years by 400,000.

Have you also seen what’s happened to the shares of the six biggest housebuilders since the Budget? They’re down 18%, on average, according to the Financial Times, which warned that inflation and higher costs are creeping back.

The market’s struggles aren’t just external. The industry has yet to adapt to the digital age effectively. Many agents lament a system “stuck in treacle,” with outdated processes and limited investment in end-to-end digital transaction solutions.

I’ve also long called for licensing and better regulation to professionalise the sector and improve its efficiency, but there appears to be little political appetite for such reforms.

At the same time, the debate over business models is intensifying. Online agencies like Purplebricks and Yopa, once touted as disruptors, are now struggling to justify their existence. Their cost-cutting strategies have often come at the expense of service quality – a race to the bottom that’s harming the profession as a whole. As consolidation looms, only agents who adapt and deliver true value will survive.

The reality is stark. Agents can’t absorb these rising costs indefinitely. They must either pass them on to clients – a tough sell in a price-sensitive market – or risk making no profit at all. For some, this will mean scaling back operations; for others, it could mean exiting the market altogether, echoing what we’ve seen in other sectors, where rising costs have shuttered high street chains.

So, as we enter this uncharted territory, we need to focus on what we can do. A big part of this will be providing an even better service to our customers and educating them on the value that we bring, particularly when defending any increase in fees.

We’ve weathered storms before. The question is whether we, as an industry, are ready to face the challenges head-on – or whether we’ll stick our heads in the sand and hope for the best. Now is the time for bold conversations and decisive action. Let’s start the debate.

Paul Smith is chairman and founder of Spicerhaart