Ernst and Young Summer Forecast 2008

Open any paper and it is all doom and gloom. The Sunday Independent ran an article this weekend quoting Peter Spencer from Ernst and Young who published their summer forecast yesterday. In a nutshell they predict the housing market will get worse before it gets better.

This is of course not rocket science as we head towards Christmas but what is a worry is the 'R' word being touted around. 6,000 job losses at Wolesly, a plumbing and building merchants and other job losses in the supporting industries means the effects of the slow down are being felt further down the line, mainly as orders dry up and invoices are not paid. The rest of the economy has to panic as well for a recession to really bite and the press are doing their best to ensure that happens. For example, the report says the UK is 'flirting with recession', the papers say the UK is 'heading for recession'.

Anyway, my very humble opinion is that with consumer confidence so low it will only be the brave who come out of the winter property market hibernation looking to sell/buy property the rest will sit on it for another year. People with money will look at picking up deals in the second quarter next year and house builders will be forced to spend on marketing and come up with novel ways to shift their stock.

Here is what the reports says about the housing market:

And the free fall in housing market will continue

Credit markets in the developed financial markets are still showing little sign of loosening and continue to impact on the increased cost and restricted availability of mortgage finance. In light of the deteriorating economic environment, ITEM expects that house prices have significantly further to fall.

Spencer says, "We expect prices to drop by about 10% through 2008 and a further 6% through 2009. At the same time, we expect housing turnover to fall by about 35% this year and a further 10% in 2010, with all the usual effects on the associated expenditures. It is worth emphasising, however, that the correction in house prices is likely to be far greater outside London."

I also read a piece in the FT this weekend that analysed the crashes since 1720 odd and one thing is for sure, it will get better and then we will have another crash in the not so far future as apparently we never learn the basic fundamentals of risk (well, the banks never learn) and we all get caught up in the roller coaster of the good times forgetting that they cannot last inevitably.

The Negotiator

Hot on the heels of Estate Agent Today, the Negotiator has launched a new web site.

Early days and more content needed, but good to see this space is changing.

New Web 2.0 mind map

1000watt consulting have just released their updated mind map for all things web 2.0 in the real estate game.

This is an essential reference tool and the old one has had much use from us so it is (a) great to see an updated version and (b) great to see us on there. We are flattered and thanks to readers and the guys at 1000watt.

Agents should spend a few minutes to look at the many excellent sites on this map and whilst many are states based it is all starting to happen over here so look into the crystal ball and see where you should be in 12 months.

New poll

Harriet Harman says "grave cause for concern" for the housing market, but the government is "taking action"

We ask, who is to blame? The government, the banks, estate agents, George Bush, or someone else. Please vote for one, a few or all and tell us if you think someone else is to blame.

Just to expand upon the heading, Harriet Harman was reported by the BBC when she was filling in for the PM recently (he was hiding somewhere I suspect). She painted the picture that all was not lost and it was not as bad as the 1990s.

The opposition said not enough was being done in their house purchase scheme and Harman replied that ministers had asked the Bank of England to provide £50bn to help the banks and had reduced stamp duty. Translated into standard non political language this means the government has done absolutely nothing!

Online marketing spend

FOREM posts on a recent Yahoo! study regarding Internet influences, home buyers and sellers (house in the UK is actually the more used search term), specifically how the Internet influences consumers when it comes to buying a house and selecting an estate agent.

FOREM and the USA of course mention there is no great surprise in the results and we would agree, but this needs to mentioned in the UK again and again: Yahoo found that the Internet plays a ‘PIVOTAL’ role in the selection process and was ‘CENTRAL’ in helping consumers identify agents.

There is no link to the actual study, but the reported results make for interested reading (taken from FOREM). See point 3 especially!!

- Home buyers and sellers consider approximately two agents on average before making a final decision.
- The Internet impacts consumer trust. Forty percent of respondents credited a site in increasing their trust in the agent.
- 74 percent of people who accessed an agent Web site got there with the help of a search engine.
- The online research process is quick and intense: consumers spent an average of 12 hours online researching agents and 75 percent selected an agent within one week of starting their search.
- 45 percent of respondents used the Internet to learn about agents they didn’t know existed.
- 41 percent discovered special deals and promotions offered from an agent through the Internet.

Agents in this country ought to be looking at how these findings impact upon their marketing spend. Forget for a moment that many agents are still at stage one of online developing and just consider the basic finding. Near on 75% of people first turn to the Internet (I would say it is more than this, but I would) to look for a property, so where do you spend your marketing budget?!! Yes, online!! Or at the very least spend proportionally to marry up with your audience. It is not rocket science. Your customer is online!!

Rightmove put up member prices again!

The Negotiator email alert informed me yesterday that Rightmove is putting up is prices for new lettings members by 30% odd.

Lettings are arguably more buoyant and no doubt Rightmove has spotted an increase in residential agents moving into the lettings game or upping their involvement within it.

Rightmove are quoted as saying ‘…We haven't got customers over a barrel; we have created the biggest marketplace for lettings. It is very tough for agents but frankly most will cut back on advertising in the papers…’

I am not sure how to take this comment. On the one hand it smacks of arrogance and on the other hand it is woefully naive. Many agents stopped offline marketing some time ago and to arrogantly assume that agents will cut back on other spending just to be on Rightmove is way off the mark. As we have mentioned many times before, agents are now looking very much at their cost per lead and will look at this price increase from the standpoint of their overall online marketing spend.

Notwithstanding the free options available, agents I know would rather spend their precious online marketing budgets on performance based models and would see the rightmove increase as merely an increase in their base line cost per lead, which is already too high.

Frankly, this is shameful and misunderstands the future of the market by a mile. Indeed, if Rightmove were lucky enough to sign 100 new agents in the next six months (which I doubt), is this price increase really going to effect their bottom line and/or their share price, I don’t think so. They will lose more in poor PR, will put off the very few agents who may have been thinking of signing up and may even be the final straw for some of the many who are considering leaving.

Zoomf crowned Champions

In a thrilling Championship final, Globrix went head to head with Zoomf. Globrix were well ahead until an injury time bonanza from Zoomf that stunned the leaders and allowed Zoomf to take the Championship with 35% of the vote. Both were well ahead of the field with FindaProperty and PropertyFinder fighting a very close match for third place. With only one vote in it PropertyFinder secured third place. Rightmove got their formation wrong, left their substitutions too late and finished with 4% followed by the others.

Full results:

Dothomes - 1 vote 0%

Findaproperty - 26 votes 13%

Globrix - 50 votes 26%

Nestoria - 5 votes 2%

PropertyFinder - 27 votes 27%

Rightmove - 9 votes 4%

Zoomf - 67 votes 35%

Other - 3 votes 1%


Total votes 188

Suggestions for next month's poll. Perhaps a semi-serious one????