Estate Agency Market in England and Wales: Competition Case Studies
1 April 2004
By David Matthew et al.
On 23 March 2004 the OFT published its market study on UK Estate Agency services. An interesting finding of the study was that estate agency was broadly competitive in terms of market structure, entry and exit, yet it exhibits limited price competition. This appeared to reflect in part a low propensity of customers to obtain quotes from a large number of estate agents.
As part of its study the OFT commissioned NERA to undertake six case studies of local estate agency markets. Using a variety of raw data sources NERA collected and analyzed data on estate agency activity in six localities to provide an assessment of market structure, market churn, entry and exit, pricing behavior and the dynamics of competitive interaction. NERA's conclusion was that estate agency market structure and dynamics were consistent with a broadly competitive market, but that there were significant pricing rigidities. The NERA report suggested various explanations for this paradox.
