Sommerville: Get ready for the market to rebound
The number of conveyancing law firms has fallen to a new low as the market felt the “full brunt” of Brexit-related political and economic uncertainty last year, new research has found.
The quarterly tracker from Search Acumen said this was also reflected in a sharp decline in transaction volumes, but it predicted this would not last with confidence returning.
The total number of “active” conveyancing firms tumbled to a record low of 3,920 in the final quarter of 2019, down 5% from a year earlier. The research dates back to 2011.
Transaction volumes dropped 8% on the previous quarter, and 15% on the same period in 2018, to 226,444.
Search Acumen said: “The flagging industry data can be largely attributed to political indecision and the moveable feast that was the Brexit deadlines in Q4.
“This negatively impacted homebuyers and property investors alike, by dampening their appetite and delaying purchasing decisions, before post-election clarity and stability emerged at the very end of the year.”
The last time quarterly transaction volumes were this low was Q2 2017 (210,964), another period of heightened political uncertainty which saw the UK triggering Article 50 in March 2017, followed by Theresa May calling a general election.
The top 1,000 firms by number of transactions experienced their worst quarter of 2019 for business, registering 161,120 transactions in total, down 20% on a year earlier – the other 3,000 had their best quarter, but still dropped 2% year on year.
As a result, the top 1,000 firms’ market share dropped five percentage points to 71%, their lowest since Q3 2012.
But the very largest firms “were somewhat insulated from this trend”, Search Acumen said.
“Despite fewer transactions in the market, they still saw their share of conveyancing activity increase annually from 5.4% in Q4 2018 to 6% in Q4 2019, which is the first time they have broken the 6% marker for two years (since reaching 6.2% in Q4 2017).”
Andy Sommerville, director of Search Acumen, said: “The curtain call for 2019 couldn’t come soon enough for a conveyancing market which was rocked by political peaks and troughs, prompting several indicators to annual or even record lows in Q4.
“What has come as a surprise is the comeback of smaller conveyancers, which gives us hope that the market is not broken from top to bottom, but remains in need of transformation.
“Despite the market slowdown, property buyers and investors have not made a flight to the top but instead continue to work with smaller conveyancers who bring local, well-honed expertise to the table.”
Mr Sommerville predicted that the improved political climate meant the next challenge for firms would be to “ride the likely surge in demand as the backlog of transactions that were put on hold start to be unleashed as consumer and business confidence returns”.