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?
