Competition heats up as conveyancing transactions fall 16% in Q1 2015

Conveyancers face mounting pressure to maintain and grow their business as total transactions for the first quarter of 2015 fell 16% from Q4 2014 and 5% year-on-year, according to the Conveyancing Market Tracker from Search Acumen, the search provider.


The Tracker – which uses Land Registry data to assess competitive pressures in the conveyancing market – also reveals fewer firms were active during Q1 2015, with an average of 4,177 registering transactions each month, down -2% from 4,259 in Q4 2014 and -4% from 4,330 in Q1 2014.


However, Search Acumen’s analysis shows total transactions have fallen faster than business numbers both quarterly and annually. This has been influenced by tougher lending rules which have reined in the housing market – including the Mortgage Market Review (MMR) and subsequent actions by the Financial Policy Committee (FPC) – along with a degree of uncertainty ahead of the election.


As a result, the average conveyancing firm recorded 57 transactions during Q1 2015: just below the 58 clocked up a year earlier and down -14% from 67 in Q4 2014.


Big firms suffer the most from short-term slowdown

The Conveyancing Market Tracker indicates that the bigger firms felt the greatest impact of the Q1 slowdown. Average quarterly transactions among the top 1,000 conveyancers fell to 173 in Q1 2015: down -16% from 207 in Q4 2014 and down -5% from 182 in Q1 2014.


The drop-off was even greater among the top five, whose average of 3,021 transactions in Q1 2015 was down -36% from 4,751 in Q4 2014 and down -26% from 4,098 in Q1 2014.


As a result, the top five firms saw their collective market share reduced by two percentage points from 8% in both Q1 2014 and Q4 2014 to 6% in Q1 2015. This was the same percentage share they enjoyed back in Q1 2012.


However, the market recovery since then means the biggest firms are still seeing significantly more customers coming through the door than was the case three years ago. A 6% share of conveyancing activity in Q1 2015 amounted to 15,106 transactions: 61% more than in Q1 2012 when it added up to just 9,385.


Despite the drop since Q1 2014, longer term comparisons of overall business volumes also look healthier with the total of 238,688 Q1 transactions in 2015 up by 36% from 176,100 in 2013. The typical firm has seen total Q1 activity grow by 43% since 2013 (when they averaged 40 transactions) and by 57% since 2012 (when they averaged just 36).


This upwards trend has been boosted by the falling number of competing firms in the market. There were 225 fewer firms active in Q1 2015 compared with Q1 2013, and 283 fewer than in Q1 2012.


Mark Riddick, Chairman of Search Acumen, comments:

“The fact that larger conveyancing firms have been impacted most by the slow start to 2015 is a clear sign that no-one is immune to competitive pressures in a temperamental housing market. A drop in transactions during Q1 was perhaps an inevitable result of stricter lending criteria and pre-election uncertainty. Conveyancers can take some comfort from the fact that the average firm is still clocking up more transactions than they were two or three years ago.


“Looking ahead, the quick transition from Coalition to Conservative governments will help to avoid the market disruption that might have come from weeks of post-election party negotiations. There is still a real need for major supply side policies to create more movement in the property market. But factors such as negative inflation, low mortgage pricing and the improving outlook for jobs should help to boost conveyancing activity this year.


“All the same, our analysis clearly shows that conveyancing firms cannot simply rely on there being more customers to go round if they want to maintain and grow their own volumes. At the start of the year, they reported that improving systems and processes was the biggest challenge to growing their business. Fierce competition means there is no room for operational inefficiencies and no time for any firm to take their eye off the ball if they want to hit – or exceed – their 2015 targets.”


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