One in five estate agents 'could go bust'

One in five estate agents in the UK are at risk of going out of business, according to a new report.

Accountants Moore Stephens says 4,928 of the country's 25,560 property firms are showing signs of "financial distress".

Much of the pressure follows the rise in property websites such as Zoopla and Rightmove, which have made using a full-service estate agent "inessential", says The Independent.

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Added to this, there has been a rise in the likes likes of Purple Bricks and House Simple, which operate a "low-cost, fixed-fee" business model with mostly online customer contact, says The Guardian.

Moore Stephens said particular pressure was building on smaller firms caught between low-cost websites and larger chains who can achieve economies of scale.

Mike Finch of Moore Stephens said: "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.

“Many areas across the UK are over-saturated with estate agents and competition is becoming too much for some smaller businesses.”

Estate agents in general have been hit in the past year by a slowdown in transactions, as investment and high-value sales drop off and high house prices make moving up the property ladder increasingly unaffordable.

In the year to March, 1.2 million properties were sold, a 32 per cent decrease on the pre-crash high of 1.7 million.

Two of the country's bigger firms, London-based Foxtons and the UK's largest property sales company Countrywide, last week reported a substantial slide in profits of 64 per cent and 98 per cent respectively.