House sellers aren't the only ones the sluggish housing market is taking its toll on, it turns out, after a study suggested one in five estate agents are at risk of going insolvent.
The research, by accountancy firm Moore Stephens, found 19 per cent of high street estate agents are showing signs of financial distress.
Trading updates from Foxtons and Countrywide last week showed estate agents are being squeezed as the falling number of properties being put on the market combines with increased competition from online estate agents such as Emoov and PurpleBricks, which don't charge commission.
Shares in Countrywide, the UK's largest estate agent, dived after it said pre-tax profits had fallen 90 per cent to £447,000 in the six months to the end of June. On the same day, Foxtons reported a 64 per cent drop in pre-tax profits, from £10.5m last year to £3.8m this year.
The fall is partly thanks to a dive in property sales, which have fallen 32 per cent from their pre-crisis peak of 1.7m, to just 1.2m last year. The evidence suggests people are choosing to stay put and expand their homes instead: the number of planning applications for extentions rose from 29,041 in 2015 to 29,654 in the last year.
Meanwhile, figures published by the Royal Institution of Chartered Surveyors (RICS) earlier this month suggested the number of homes being put on the market has fallen for four months in a row, with the 12-month indicator for the capital falling to its second lowest for the year so far.
More evidence for London's sluggish market came last week, when analysis of homes in the capital listed on Zoopla suggested a third of properties put up for sale have had their prices cut.
“Traditional high street estate agents’ profit margins are being squeezed from both sides – from cut price online competitors, to their larger counterparts on the high street – who are forcing them to up their spending or give up the race," said Mike Finch, restructuring and insolvency partner at Moore Stephens.
“Many areas across the UK are oversaturated with estate agents, and competition is becoming too much for some smaller businesses.”