As traditional estate agents continue to struggle and mull combining with online competitors, now is the time for investors to look at different ways to invest in the property market.

Propio Parul Scampion

By Parul Scampion, co-founder of Propio

The news that more than 150 estate agency firms went insolvent in the year to May 2018, according to a new Moore Stephens study, shows that many buyers are holding fire and playing a ‘wait and see’ game with prices, rather than buying now, impacting the whole estate agency sector. Worryingly, the report also stated that more than 7,000 estate agents “currently show signs of financial distress”.

As well as the new-found caution displayed by potential buyers, many high street estate agents are also feeling the effects of cuts to letting fees, online competition and a generally sluggish property market.

These drivers are not only impacting estate agents but are denting the sentiment of shareholders in property groups. With investors last month ditching Countrywide shares following its second profit warning this year, it is clear that the fact that buyers are waiting to see if they can get a better deal in the future is biting. The Brexit factor, high stamp duty costs and the fact that house prices remain beyond the reach of many buyers are also impacting the decisions of wary retail investors.

Rent signs

Will the Brexit factor, high stamp duty costs and high house prices lead to estate agent consolidation?

Source: Shutterstock/Paul Maguire

One way out for the industry could be consolidation. This could kick off sooner rather than later following Russell Quirk’s (Emoov’s founder and CEO) comments in Property Week last month floating the idea of a merger with Countrywide.

Nevertheless, this current malaise only goes to show that homeownership or buying shares in listed housebuilders or estate agents isn’t the only way to invest in – and get attractive returns – from the property market.

Instead of banking on the likes of Countrywide, now is the time for investors to get into property development through crowdfunding. Investing directly in a portfolio of property development projects, which through are all backed by the property assets themselves is the common-sense way to hedge against market volatility and manage risk in this uncertain environment.