The number of estate agencies entering administration has increased by 57% year-on-year, according to a new report.
The figures, from accountancy firm Wilkins Kennedy, show that 77 agencies became insolvent between June 2012 and June 2013, compared to 49 in the previous 12 months.
Anthony Cork, partner at Wilkins Kennedy, pointed to prolonged stagnation in the property market as a defining factor behind the increase, with fewer successful sales resulting in intense competition between estate agents.
Analysis reveals, however, that only a small percentage of insolvent estate agents were based in London.
Cork said: “London has always been a more resilient market for estate agents, due to the higher property prices, constant demand and healthier lettings markets.
“Although competition for business is fierce, transactions are constantly being made, which isn’t the picture elsewhere in the country.”
Another factor contributing to the decline of high street-based estate agencies is the increasing use of online property information portals such as Rightmove and Zoopla.
Cork said: “While most people do still sell through agencies, the internet means securing a sale is now much less about knowledge of the local market and the ability to price a property correctly for the right buyer.
“This makes it harder for smaller agencies to compete with the more financially robust, and well established larger chains.”
Cork also commented that an increase in unemployment and a consequent squeeze on household budgets had meant some sellers were under pressure to sell quickly, with many turning to the new phenomenon of ‘quick sale companies’.
Sale companies usually reduce a property’s market value by 10-25%, but some companies have been found to reduce the sale price by up to 53% of the property’s market value.