Stagnant housing market hits UK conveyancing activity
Activity in the UK conveyancing market dipped significantly in the second quarter of 2017 as a stagnant housing supply and restricted home moving took effect.
This pushed total conveyancing volumes down 14% to 210,964 from 245,738 in the first three months of the year, the fewest cases in a single quarter since the middle of 2013, according to the conveyancing market tracker report from Search Acumen.
The research also shows that fewer conveyancing businesses are active in the market than was the case four years ago, but the slowdown has nevertheless put firms back to the average monthly business volumes they last experienced three years ago.
Throughout the quarter, the average monthly caseload per firm dropped by 13% from 59 to 51, the lowest quarterly figure since the second quarter of 2014 and overall low transaction volumes were accompanied with another drop in the number of active conveyancing firms.
Using Land Registry data to examine competitive pressures in the conveyancing market, the tracker report shows that the average number of firms active in the three months to June 2017 dropped 1% from 4,198 to 4,143, the lowest since tracking began in 2011.
Those firms that average between 100 and 200 transactions per month witnessed the largest quarterly decrease in number during the second quarter with the number of firms in this category dropping by a third over the quarter from 88 to 59 and 45% annually from 106 in the second quarter of 2016.
However, the analysis shows the top five ranked firms according to transaction volumes have been most insulated from the lull in the UK property market, while occasional conveyancers appear to be suffering the most.
While the top five firms saw the biggest drop in activity year on year, this comparison is skewed by the unusually high volume of transactions registered in the second quarter of 2016. This was a result of the rush to complete purchases at the end of the first quarter of that year ahead of changes to the stamp duty rules for landlords and second homebuyers.
Over the past two years, the top five ranking firms have experienced minimal change in total quarterly transactions processed from 12,481 in the second quarter of 2015 to 12,538 in the same period this year. In contrast, those firms ranking outside of the top 1,000 have witnessed a 14% decline in business from 65,342 to 56,462 or 18 cases per firm.
‘The dip in conveyancing activity should come as no surprise to those closely watching the UK property market, but it poses a significant challenge for conveyancing firms that want to survive and grow. We see from our latest statistics on productivity that the conveyancing industry is an increasingly well-oiled machine, but it can only process the transactions the market feeds it,’ said Andrew Lloyd, managing director of Search Acumen.
‘The turbulence in the UK’s political system is far from settling with Brexit and it is essential that the property market is safeguarded from continued uncertainty with clear and effective policy decisions. Last time the market was this quiet for conveyancers, we saw major interventions through Help to Buy to support first time buyers. The fact that second steppers are now finding life hard suggests there is still much to do to effectively balance the UK housing market, not least addressing the shortage of homes to go round,’ he pointed out.
‘Meanwhile, with fewer customers and increased competitive pressures, conveyancing firms face more of a challenge to attract new business. No one wants to get left behind in the second half of the year and if growth returns after the summer, the biggest winners will be those firms that are ready to leap out of the starting blocks,’ he added.