One in five estate agents are at risk of going out of business amid a growth in online companies, new research shows.
Almost 5,000 estate agents are showing signs of “financial distress”, said accountancy firm Moore Stephens.
Traditional companies are likely to have higher property and staff costs and are struggling to compete with low-cost, fixed fee online agents, said the report.
The growth in property websites has also undermined the role of estate agents, it was suggested.
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.”
The study follows a slump in profits announced last week at two of the UK’s biggest estate agents.
Countrywide, the UK’s biggest listed estate agency, said pre-tax profits for the six months to June were £447,000, down from £24.3 million in the same period last year.
Revenues and profits at Foxtons also fell in the first half as the London-focused estate agent pointed to “unprecedented” economic and political uncertainty hitting the property market.
The group said revenue fell 15% to £58.5 million in the six months to June 30, with pre-tax profit plummeting 64% from £10.5 million to £3.8 million.