LONDON (Reuters) - Through the large show windows of his estate agency on a street corner in the once up-and-coming south London neighborhood of Streatham Hill, sales manager James Brooks can look out at what once were five competitors.
“One has shut already in the last month. They closed down,” he says. He points to another on the corner.
“You see that one? That’s now a virtual office. There’s no staff in there. They have a sign saying you should call their Streatham Common branch.”
Brooks’s own team, at the local branch of estate agency Kinleigh Folkard and Hayward, has shrunk from six sales agents to four. A year ago they sold on average eight houses a week.
Now, he says, they sell half as many, at an average price about 10-15 percent lower.
“The reason there were so many estate agents is because it wasn’t hard,” he says. “More has changed in the property market in the last three months than in the previous ten years.
“There’s much more involved in the job now than there was a year ago. You need to be sharper.”
A year or so after house prices began falling in the United States, triggering a global credit crisis, the pain has spread across the Atlantic to Britain, where two-thirds of people own their own houses.
Over the last decade house prices have more than tripled and real estate became a national obsession. The estate agent became the symbol of the times — young men and women in slick suits cruising the country’s streets in corporate cars.
Ever more stylish offices appeared on every high street, typified by fast-growing outfits like London’s Foxtons chain, which put cappuccino bars in its shops and dispatched its sales force in a fleet of green Mini Coopers with colourful logos.
But now, a report by the CEBR consultancy predicts that 15,000 people will lose their jobs in the real estate industry this year, a five percent cull.
Not only have house prices been falling, but more importantly for the industry, sales volume has dried up as banks have cut back on mortgage deals.
Mortgage approvals, a leading indicator of house sales, hit a record low in March of 64,000 after averaging about 104,000 a month last year. A Reuters survey of 30 economists last month predicted approvals would hover around 63,000 for six months.
Peter Bolton King, head of the National Association of Estate Agents, said he expected about half as many homes would be sold in England this year as last year.
For the past month his group has started offering courses for estate agents on how to operate in a falling market. Classes have been sold out.
“A lot of people in this industry have come in the last 10 years, so they’ve only ever seen a good market,” he said.
Brooks’s turf in Streatham Hill was in many ways a typical British boom neighborhood.
It is a reasonably pleasant area but far from elite. The main street features a slightly shabby cluster of shops and a train station that has service to central London. Estate agencies, with their flat-screen TVs in the window, are visible in shop fronts up and down the block.
Brooks says the area’s modest Victorian terraced houses are great for young families priced out of trendier parts of town.
But by last summer the price of a basic two-bedroom flat in a terraced house had soared to around 310,000 pounds ($600,000), well over 10 times the country’s average household income.
Last year, many buyers could get a mortgage without any down payment at all. But since about March this year, banks expect a buyer to have at least 20,000 or 30,000 pounds up front — a sum out of the reach of many first-time buyers.
If it all sounds catastrophic, Brooks, ever the salesman, insists things aren’t so bad.
“In comparison to last year or the year before, there’s no way we are doing the same business. But once you’ve adjusted your expectations, there’s business to be done.”