In 2000, the average value of a UK property was £102,000.
At that time, estate agents charged an average fee of 1.8% according to various reports.
For example, the Sunday Times Awards in 2006 pegged average fees at 1.6%, and my own experience working for Halifax Property Services in the late 1990s and early 2000s aligns with a typical fee range of 1.6% to 2%.
Fast forward to today, and the average fee has dropped to around 1%, as revealed by the most recent EAMasters survey.
Meanwhile, the average property value has risen to £288,500.
Let’s compare the two scenarios:
+ In 2000: At 1.8%, the average estate agency fee was £1,836 – equivalent to £3,390 in today’s money.
+ In 2023: At 1%, the fee is £2,885 – £505 less per transaction in real terms than in 2000… tough, yet not end of the world
While this drop per transaction may not seem catastrophic at first glance, it’s the broader context that reveals the full picture.
The transaction and competition squeeze
2000: There were 9,500 estate agency firms in the UK and 1.431 million property transactions. That meant each firm sold an average of 150.6 homes annually, generating £274,000 in fees (£511,000 in today’s money).
2023: With 14,500 firms and just 1.12 million transactions, the average agency now sells 76.7 homes annually, earning £221,000 in fees.
In other words: The average estate agency firm’s annual income has dropped from £511,000 (adjusted for inflation) in 2000 to £221,000 in 2023.
Yes, many agents now benefit from lettings and FS income, which was a lot less common in 2000.
However, even factoring this in, the decline in transactional income is stark.
While these are averages and involve assumptions, they highlight a troubling reality for the industry. Estate agents are doing significantly less business per firm while earning less per transaction.
The growing number of agents and a shrinking pool of transactions have made competition fiercer than ever.
The numbers paint a stark picture, but they also illuminate an opportunity for reinvention.
Estate agents who adapt and innovate have the chance to thrive despite these challenges.
How is your agency rising to meet the pressures of fierce competition, falling fees, and changing consumer expectations?
What steps do you think the industry must take to secure a profitable and sustainable future?
What are your thoughts?
Completion. And you don’t need to go back to 2000 to see that.
In 2013 there were 9,361 registered companies operating as estate agents. At the end of 2023 it was 37,615. The number of completions for those respective years were 1,067, 000 and 970, 940. Average completions by estate agents went from 114 to 26.
Sources: Companies House and Land Registry.
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Aah! The good old days… Before Rightmove when being an agent required sitting behind a desk and actually putting sellers and buyers together.
In my best year as an agent, just before the Dot Com bubble burst, I got paid a LOT of money – inflation adjusted to over £200,000. That was working for a high street agent in North London. Now I will admit that we had control of the market and sold probably a third of all properties sold in 4 adjacent postcodes. We charged 2% and not a penny less. Multiple agency was always 3%. It was a lot of fun as well as a lot of hard work.
In my last year as an agent I earned a fraction of that so decided to transition to something else. I’m still in property but earn more than I did as an agent for a 9-5, Monday to Friday job with significantly less stress. Happy Days!
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Bearing in mind the change in the nature of our business over that time, I think that you need to look at number of offices or better still number of people employed. In 2000 many businesses were multi office companies with numerous employees. In 2023 does a self employed eXp person or similar counts as a firm in your figures? How are self-employed work from home individuals counted? Having been in the business since 1982, we used to agree 8 sales a week in an office with two negotiators a manager and a secretary. I still pinch myself when I say it. However we have had our own business since 1996 and we are selling more properties per branch now than we ever have in that 28 year period. The competition doesn’t feel as great as it was 20 years ago with many corporates focussing on the ‘add-ons’ and many independents focussing on lettings. We are about to have a record year from 2 out of 5 branches and close to records on 2 others. It’s not all doom and gloom. As an industry we should be charging a bit more. We think an average fee should be in the region of £4,250 in our area to be able to pay staff properly for long hours and hard work. That equates to an average of 1.25% until we can start being paid for all the abortive work we do. PB did have that bit right – get an up front fee from everyone. Maybe £1,000 then £500 per month with the balance on completion. BUT we must also provide service charters that we have to uphold.
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You make a good point regarding the self-employed operators. As a counter, the three big corporates that have over 2,000 offices only count as three businesses, so I guess it may balance? But for completeness, let’s take the best guess at what the self-employed number does and mix in how it looks from an on-the-high-street point of view.
Depending on which way the wind is blowing, eXp has around 600 agents operating. This represents 1.59% of the total active registered estate agency businesses. I’ll assume that the total number of self-employed agents is a generous 10% i.e. 3,761.
By not counting the self-employed agents the numbers shifts to an average of 29 completions per registered company. I’m struggling to identify quality data about the number of highstreet branches there are. The latest ONS data for those involved in Real Estate puts the number at 281,000. That’s clearly the industry as a whole but using that number you get only 3.5 completions per employee which I think is pretty meaningless!
Let’s take your figure of 1.25% as an average fee (indicating an average house price of £340,000) and apply that to UK average house prices. In January 2000, the figure was £75,219 which is a fee of £940. In September 2024 it’s £291,828 and a corresponding fee of £3,647.
Clearly, the monetary value of fees has risen. As have all the costs, along with new and different ones.
You can play the numbers a different way. If the number of completions for 2023 was 970,940 and the average house price for that year was £285,000 that’s the total property value completed for 2023 of £276,717,900,000. This equates to £7,356,583 per registered estate agency business! Or for you, about £1.4m per office. Now only you know the true figure of your business and I’m not asking you to confirm or deny. But what you can do is understand the margin of error when playing with averages.
My main point is, and I probably should have made this at the start, is that headlines about earning 56% less than at the start of the century are not helpful. Numbers and data are wonderful things. We think they’re fixed when actually they are manipulated and highlighted based on the point(s) we want to make…
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