to the Office for National Statistics, Coronavirus has already cost 730,0000
people their job.
Early estimates released in the middle of August by the ONS showed that the number of UK employees fell by 2.5% in July compared to March. This quarterly drop in employment was the largest seen since the Credit Crunch days of May to July 2009. This, despite the government’s unprecedented supportive measures during the crisis.
There is no question that the furlough scheme has helped to preserve millions of jobs so far. However, increased business costs reduced demand, and dwindling cash reserves all have the potential to force firms’ hands, into making redundancies when the programme finishes in October.
Despite the national employment picture overall, looking promising, The Bank of England’s chief economist Andy Haldane said that this summer’s figures were “materially better than we would have expected two or three months ago” coming into August, but he warned that some questionable” numbers understate the real situation.
Forecasters had predicted a rise in unemployment of up to 9%, contrasting wildly with the less than 4% figure reported in the last two updates from the ONS. And whilst the Bank revised their prediction down to a more conservative 7.5% for this year, dropping to 6% at the end of 2021, the main concern is that a high number of furloughed workers are living on borrowed time, with the scheme giving us an artificial view of the virus-induced jobs crisis.
On the ground then, what does this mean for Estate Agents? Well, I would say there is a cold wind blowing as the government looks to wind up the furlough scheme. I would imagine that some High street agents will be worrying that they could be vulnerable. I envisage a cashflow crisis, as they and many other High Street retailers suffer almost a perfect storm? A combination of landlords demanding backdated rent payments, less footfall, Rightmove and Zoopla increasing prices and more importantly an absence of property completions from the lockdown period. This could make for an uncomfortable November, that many agencies may not be equipped to deal with.
There are certainly tough times ahead; it will be interesting to see how the industry copes through the fourth quarter. The unexpected boom market will help, that is for sure, but I have no doubts we will see branch closures and redundancies as agencies battle to balance the books. I’m sure many will turn to the hybrid model to weather the storm and I believe small independents and online agents will be better placed to operate in this new market as they offer more flexibility and have less red tape and corporate processes to wade through. This dynamic approach is what this market has been lacking for years and I am not sure the big brands can react quickly enough to compete. Time will tell, I am quite sure that there are exciting times are ahead